Tesla stock split: What to know about the vote to split TSLA shares

Usually, Tesla investors care most about when the company plans to release its quarterly earnings report, which Tesla most recently did on July 20. For its Q2 2022, investors seemed largely impressed with the electric carmaker’s revenue growth of 43% year-over-year.

Yet for many Tesla investors, the most important day of 2022 is tomorrow. That’s the deadline for a shareholder vote on whether the company should split its stock. Here’s what you need to know:

• What’s happening? Tesla (TSLA) shareholders are going to vote on whether Tesla should split its stock.
• When does the Tesla stock split vote take place? Investors could vote now, but they need to make sure to do so by Thursday, August 4.
• What, exactly, is being voted on? Tesla shareholders will vote on whether the company should split its stock 3-to-1.
• What is a 3-to-1 stock split? Any stock split just means that existing shares are divided by a certain factor. For example, a 3-to-1 stock split of a stock with 100 million shares before the split would now be a stock with 300 million shares.
• How does a stock split affect a stock’s price? A stock split reduces a stock’s price by the same factor it was split by. So, take our imaginary company with 100 million shares and imagine each share is worth $3 before the 3-to-1 stock split (valuing the company at a $300 million market cap). After the stock split, the company’s shares would now total 300 million shares, but they would now be worth just $1 each.
• So stock splits cause the value of a stock to go down? Kind of, but not really. In a 3-to-1 stock split, for example, while the shares are now worth three times less, all stock owners have three times the amount of shares, meaning the total of their investment is still the same.
• If a stock split doesn’t actually change a company’s valuation, why do companies split their stock? Mainly to make the stock cheaper, which makes it more attractive to retail investors. Tesla shares are currently worth about $900, which makes even a single share unaffordable to some mom-and-pop investors. But a 3-to-1 stock split (if TSLA shares are still $900 at the time of the split) would make a single share of Tesla only $300. And a cheaper stock price could see more people buy in, which could raise the value of the shares.
• Have TSLA shares split before? Yes, on August 31, 2020, the company’s shares split 5-to-1.
• Who can vote to split TSLA shares now? All shareholders of Tesla stock are eligible to vote.
• I’m a TSLA shareholder. How do I vote? You’ll vote through the brokerage firm you use to manage your shares (for example, Robinhood, TD Ameritrade, etc). Tesla has a list of instructions about how to vote depending on your brokerage firm.

Still time to vote! https://t.co/ZbFWv0pkgG

— Elon Musk (@elonmusk) August 1, 2022