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Tesla explains its 3:1 stock split strategy

Tesla announced yesterday that it plans to execute a 3:1 stock split sometime after its August 4 shareholder meeting. Its latest stock split, which took place in August 2020, made shares more affordable for young investors and individuals after the automaker’s share price surged. at $2,213.40.

But the company’s goal for the 3:1 stock split is slightly different and more employee-focused, according to Tesla’s SEC filing 14A, which was filed yesterday.

Tesla said its upcoming stock split “will help reset the market price of our common stock so our employees have more flexibility in managing their equity, which we believe can help maximize the Shareholder Value In addition, as retail investors have expressed a high level of interest in investing in our shares, we believe that the stock split will also make our common shares more accessible to our retail shareholders.

Tesla is one of the most attractive places to work because of its employee equity programs, which include the Employee Stock Purchase Plan (ESPP). This allows Tesla employees to buy company stock at a discount. Tesla knows its benefits are a great way to attract high-end talent for its programs, and a stock split was definitely a way to rejuvenate the benefits package.

“Our success depends on our ability to attract and retain excellent talent, not only by providing a respectful, safe, inclusive and equitable workplace, but also by offering exceptional benefits and highly competitive compensation plans. Unlike other manufacturers, we offer every employee the opportunity to receive equity,” Tesla said. “Since our stock split in August 2020 through June 6, 2022, our share price has increased 43.5%. While this appreciation in value has benefited our employees immensely over the years, we want to ensure that all employees, regardless of when they join, have access to the same benefits. We believe the stock split would help reset the market price of our common stock so that our employees have more flexibility in managing their equity, which we believe can help maximize shareholder value. .

Retail investors shouldn’t worry, Tesla always kept them in mind when announcing the 3:1 split. “Additionally, 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 said in the filing.

Disclosure: Joey Klender is a shareholder of TSLA.

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Tesla explains its 3:1 stock split strategy






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