Tesla Adds to Wave of Massive Stock Splits

A driver recharges the battery of his Tesla car at a Tesla Super Charging station at a petrol station on the motorway in Sailly-Flibeaucourt, France, January 12, 2019. REUTERS / Pascal Rossignol / File Photo / File Photo

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March 28 (Reuters) – A Tesla car (TSLA.O) Monday’s announcement that it will seek shareholder approval to increase its number of shares in order to enable a stock split adds to the recent wave of corporate giants splitting their shares in a bid to lure more investors.

Tesla said in a statement that it will hold a vote at its next annual shareholder meeting to increase the number of authorized shares in order to enable a stock split. Read more

The stock split by Tesla, which would have been approved by its board, would be the second electric car maker since 2020, and will follow stock split announcements by other major US companies in recent years.

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In the past two years, Apple (AAPL.O)nvidia (NVDA.O) and Tesla (TSLA.O) They split their stakes, while Amazon (AMZN.O) The Google Alphabet Alphabet (GOOGL.O) It recently announced upcoming stock splits.

Megacap stock split

Companies split their stocks to make their stock prices look less expensive and attract more investors. However, the stock split does not affect its fundamental fundamentals.

However, BofA Global Research said in a recent research note that the stock split is “historically bullish” for companies that apply it, with its shares reporting average returns of 25% after one year versus 9% for the market overall.

Tesla stock rose 8% Monday, adding more than $100 billion to the stock market’s value.

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Amazon has gained about 20% since March 9, when the e-commerce heavyweight announced a stock split that will go into effect on June 6. That compares with a 7% increase in the Nasdaq (nineteenth) during the same period. During that time, Wall Street also saw a broad rebound in massive growth stocks after losses earlier this year, as well as volatility linked to higher interest rates and Russia’s invasion of Ukraine.

Tesla was the most traded stock among online brokerage Fidelity clients on Monday, with buy and sell orders split roughly evenly, indicating that retail investors are cautious about the company.

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Since joining the S&P 500 in December 2020, Tesla has been one of the most weighted stocks, currently accounting for more than 2% of the index. It has gained nearly 300% since the stock split was first announced in August 2020.

Other S&P 500 companies with nominally high stock prices, which analysts say may hint at a future stock split announcement, include Chipotle Mexican Grill. (CMG.N)up 0.1% Monday at $1,558, plus Booking Holdings (BKNG.O)It is trading near flat at around $2,247.

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(Reporting by Noel Randich) Editing by Cynthia Osterman

Our criteria: Thomson Reuters Trust Principles.

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