A driver charges the battery of his Tesla car at a Tesla Super charging station at a gas station on the highway in Sailly-Flibeaucourt, France, January 12, 2019. REUTERS/Pascal Rossignol/File Photo/File Photo
Mar 28 – Tesla’s (TSLA.O) announcement on Monday that it will seek shareholder approval to increase the number of its shares to allow for a stock split adds to a recent spate of megacap Companies splitting up their shares to attract more investors.
Tesla said in a filing that it would vote at its upcoming annual meeting to increase the number of shares authorized to allow for a stock split. Continue reading
A Tesla stock split approved by its board of directors would be the electric carmaker’s second since 2020 and would follow stock split announcements by other major US companies in recent years.
Over the past two years, Apple (AAPL.O), Nvidia (NVDA.O) and Tesla (TSLA.O) have split their shares, while Amazon (AMZN.O) and Google parent Alphabet (GOOGL.O) recently split their stakes announced stock splits.
Megacap Stock Splits
Companies split their stocks to make their stock prices look cheaper and appeal to more investors. However, splitting a stock doesn’t affect the underlying fundamentals.
Still, BofA Global Research said in a recent research note that stock splits are “historically bullish” for companies that do them, as their shares are yielding an average return of 25% a year later, versus 9% for the broader market.
Tesla stock rose 8% Monday, adding over $100 billion to its market value.
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Amazon is up about 20% since March 9, when the e-commerce heavyweight announced a stock split that will take effect on June 6. This compares to a 7% gain in the Nasdaq (.IXIC) over the same period. During this time, Wall Street also saw a broad recovery in megacap growth stocks after losses earlier this year, as well as volatility related to rising interest rates and Russia’s invasion of Ukraine.
Tesla was the most traded stock among Fidelity’s online brokerage clients on Monday, with buy and sell orders split almost evenly, suggesting retail investors are wary of the company.
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Since joining the S&P 500 in December 2020, Tesla has been one of the most heavily weighted stocks, currently accounting for over 2% of the index. It’s up about 300% since announcing its first stock split in August 2020.
Other S&P 500 companies with nominally high share prices that analysts say may portend a future stock split announcement include Chipotle Mexican Grill (CMG.N), which rose 0.1% to $1,558 on Monday, and Booking Holdings (BKNG.O). , which is trading almost unchanged at around $2,247.
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Reporting by Noel Randewich; Editing by Cynthia Osterman