Tesla stock (NASDAQ:TSLA) has witnessed a rapid price increase this week with over a 7% increment so far amidst the recent proposal from the company to pursue a stock split.
On Monday, the company announced that they approved an increase in the number of authorized shares to enable a split in the form of a stock dividend.
Tesla’s decision to split the stock marks its second stock split in less than two years. Tesla is currently seeking to obtain investors' approval to carry on with the process. The last stock split carried out by Tesla was in August 2020 at a 5-for-1 ratio. This brought about a significant increase in price value since then. Thus the stock has doubled after the split with over a 130% addition.
The final decision to split its stock was after the company suspended its Shanghai factory amid COVID-19- warranted lockdown. While the stock dividend will be contingent on final board approval, the company will seek shareholders' final consent to effect the increase in its authorized share capital at its upcoming annual general meeting next month.
Tesla management revealed in a tweet that its board has approved the proposal but that the dividend is contingent on final board approval by shareholders during the forthcoming annual shareholders meeting. The Tesla stock is currently trading at $1,099.64, giving the company a total market cap of over $1.2 trillion.
Tesla's equity base comprises 1.03 billion shares available on the market. Its shares have been up to over 70% since last year. Splitting a stock has a significant advantage of making it more accessible in bits to large retail investors, thereby increasing the number of shareholders and market cap invested into the project. Hence, many would consider it an excellent opportunity to invest in Tesla stock as more gains are expected from the split.