Earlier this month, Tesla (NASDAQ:TSLA) announced plans to carry out a three-for-one stock split. The move was approved by the board of directors, and it has come into effect today. Every person on the Tesla shares register on 17 August, will receive an extra two shares, for every one share held. Corporate actions are structured in a way where the net difference is zero, from before the event, until after the event. Meaning shareholders, who are impacted by the move, will neither gain nor lose out because of the transaction.
Some companies carry out stock splits to deliberately lower their share price – possibly to make their shares more affordable to a wider range of potential investors. Tesla’s share price is currently in the region of $900 per share, so certain sections of the investment community might avoid the company as even one share might be more than they are willing to commit to a single investment. Tesla carried out a five-for-one stock split in 2020.
Prior to the corporate action, Tesla’s share price was above $2200, and because of the split, the new share price was below $380. Prior to last night's stock split, the share price was in the region of $900, it underlines the rally in Tesla that the stock jumped over 130% between the two stock splits. Tesla shares are now trading in the region of $300.
Last month, Tesla posted mixed second quarter numbers, but traders reacted positively to the update. EPS was $2.27, smashing the $1.81 estimate. Revenue was $16.93 billion, while analysts had expected $17.1 billion. Automotive sales were $14.6 billion – so it accounted for the vast majority of total revenue. The energy business and the services division posted revenue of $1.47 billion and $866 million, respectively. Revenue from regulatory credit was $344 million, down almost 3% on the year.
Production is moving up a gear as the factory near Berlin started producing more than 1,000 cars per week in June. With respect to the operation in Austin, Texas, the group said it anticipates the 1,000 cars per week metric will be achieved in the months ahead. The group maintained its annual vehicle production guidance of increasing deliveries by roughly 50% for a "multi-year horizon."
In early 2021, it was announced that acquired $1.5 billion worth of Bitcoin. The cryptocurrency has seen a dramatic fall in recent months. At last month’s quarterly update, Tesla confirmed it cashed in roughly 75% of its Bitcoin, which boosted the group’s balance sheet by $936 million. Elon Musk, the CEO, clarified the company wanted to increase its cash holding amid the lockdowns in China. Musk went on to say it should not be viewed as a "verdict on Bitcoin."