Tesla shares shot up in after hours trading on Tuesday (US time) after the electric car maker announced it will implement a five-for-one split of its stock – currently valued at nearly $US300 billion.
Share values for Tesla have skyrocketed since January, gaining 229% to reach a high of $US1,643 ($A2,307) in July. The electric car maker is now almost as valuable as Toyota and Volkswagen combined, and has held claim to the title of world’s most valuable car maker since June.
With values so high, the split – which Tesla enthusiasts have been requesting for months – is intended to “make stock ownership more accessible to employees and investors.”
From August 21, every stockholder will “receive a dividend of four additional shares of common stock for each then-held share, to be distributed after close of trading on August 28, 2020. Trading will begin on a stock split-adjusted basis on August 31, 2020,” the company said.
Closing at $US1,374.39 ($A1,892.34) on Tuesday, Tesla’s share values climbed another 10% to a high of $US1,485.02 ($A2,085.64) after close, putting the stock value close to $US300 billion.
The announcement follows a similar one from tech giant Apple, which at end July announced a four-to-one split that will also be implemented in late August and is its fifth one to date.
Indeed, Tesla’s meteoric rise in value underlines the fact it is more a tech company than automotive, a fact that analysts are beginning to understand.
Although the stock split will not mean anything to Tesla in terms of operations, it will help the stock appeal to a broader base of investors.
This is important to Tesla no doubt because the stock split precedes Battery Day, at which Tesla is expected to reveal a “million mile battery”, which builds on Tesla’s 2020 story of growth.
The opening of Tesla’s Shanghai gigafactory, the introduction of the Model Y, four consecutive profitable quarters and news it is preparing to start making the Tesla Semi, have all helped boost Tesla’s market cap.
It is also now thought that Tesla CEO and co-founder Elon Musk may soon reveal something else up his sleeve – his plaid sleeve, to be more exact.
In a tweet on Tuesday (US time), the Tesla boss responded to a post saying, “One day soon, I will wear this outfit,” accompanied by a picture of actor Frank Bonner playing a character in a US sitcom wearing a plaid outfit.
He is of course referring to Plaid in the form of the high performance tri-motor electric powertrain that Tesla tested in 2019 at the infamous Nürburgring Nordschleife, effectively beating the powerful Porsche Taycan’s lap time.
1/ With all the recent buzz around SPACs, I thought I’d share my experience working on the IPO for @Tesla (as junior analyst/glorified coffee fetcher) — where I saw @elonmusk tear up the traditional playbook 10 years before anyone else was even questioning it. It worked. ???? pic.twitter.com/BQrJ8uEIdU
— Mark Goldberg (@Mark_Goldberg_) August 10, 2020
One day soon, I will wear this outfit pic.twitter.com/T0SnF4UgYK
— Elon Musk (@elonmusk) August 11, 2020
A reference to cult sci-fi comedy “Spaceballs”, the Plaid powertrain is expected to be made available in late 2020 in the form of a 7-seater Model S offering.
Musk said in April that the Plaid would not be revealed at Battery Day, but at a later, separate date. Battery Day has since been delayed however, so that may have changed.
While the latest hint is not a confirmation we may see Plaid at Battery Day, it certainly goes a long way towards creating more anticipation around Tesla’s offerings and musings on what Tesla will do post-split.
Tesla has pleasantly surprised investors in the last four quarters with a consecutive string of GAAP profits that now put it in the ring for inclusion in the S&P500.
This is expected to be finalised within a few months, reports MarketWatch, after which Tesla stock trading will likely take off again at a cracking pace.
Bridie Schmidt is lead reporter for The Driven, sister site of Renew Economy. She has been writing about electric vehicles since 2018, and has a keen interest in the role that zero-emissions transport has to play in sustainability. She has participated in podcasts such as Download This Show with Marc Fennell and Shirtloads of Science with Karl Kruszelnicki and is co-organiser of the Northern Rivers Electric Vehicle Forum. Bridie also owns a Tesla Model 3 and has it available for hire on evee.com.au.