Tesla shareholders agreed to a 3-1 stock split in a vote during the annual shareholder meeting on August 4, 2022. This means shareholders will triple their number of shares if they hold until after the split occurs.
Stock splits generally make shares more affordable for retail investors by increasing the number of shares. Tesla made an oblique reference to the impressive gains that Tesla stock has made since August 2020, when it made its last stock split. It said in a June 6, 2022, proxy statement:
“We believe the stock split would help reset the market price of our common stock so that our employees will have more flexibility in managing their equity, all of which, in our view, may help maximize stockholder value. In addition, as retail investors have expressed a high level of interest in investing in our stock, we believe the stock split will also make our common stock more accessible to our retail shareholders.”
Tesla helped its share value by setting a series of company records for quarterly vehicle deliveries and opening Gigafactories in Berlin and Texas. However, revenue and profits slid a bit in Q2 2022 despite its sale of $963 million in bitcoin.
Recent challenges included a COVID-19 related lockdown in China that forced Tesla to shut down operations at Gigafactory Shanghai. Tesla likely hoped to reduce its reliance on Gigafactory Shanghai to produce vehicles for the European market with the opening of Gigafactory Berlin. It also previously teased plans to expand Gigafactory Shanghai by leasing more land.
More recently, Tesla CEO Elon Musk teased the possibility of building a Gigafactory in Canada. A recording from a company-wide meeting indicates that Tesla is currently considering a location for its next big factory.
However, Musk indicated that increasing production capacity for Gigafactory Texas is a North American priority. Along with sourcing nickel from a U.S. mining company and breaking ground on a battery manufacturing factory in California, the increased capacity would help Tesla keep the top ratings it received from Cars.com last year for building the most American-made cars.
Despite the snubbing, the U.S. Senate recently approved a bill that will provide up to $7500 in tax breaks for purchases of electric vehicles assembled in the United States – which could provide a boost for sales of vehicles made at Tesla’s U.S. factories. Besides Gigafactory Texas, it also has Gigafactories in Fremont, Nevada, and New York.
The Gigafactory in Nevada manufacturers batteries for the Model 3 and parts for the Powerwall and Powerpack. It has occasionally been the center of drama that included an attempted cybersecurity attack and allegations that Tesla fired an employee for reporting theft at the Gigafactory.
The New York factory manufactures solar panels, solar roofs, the Powerwall, and the Powerpack. It was formerly operated by SolarCity, which Tesla acquired in 2016. As part of Tesla’s leasing agreement with New York State, the factory provides 800 jobs and will ramp up to 5,000 jobs over 10 years.
Tesla has not yet determined a date for the 3-1 stock split. It had first proposed the stock split in March.