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Will Tesla Stock Split in 2024?
No, Tesla CEO Elon Musk and his Board of Directors have not announced any plans for a Tesla stock split in 2024.
But the maverick CEO of SpaceX and Starlink could send a tweet anytime, keeping Tesla stock split rumors alive, so it is worth keeping abreast of the situation.
Key Takeaways
- Tesla shares were trading at $227.20 as of September 18, 2024, well down from their all-time closing high of $409.97 on November 4, 2021.
- Stock splits usually happen because management believes the price has gotten too high to be appealing to new investors. This isn’t the case right now for Tesla.
- Tesla’s last stock split was a 3-for-1 split in August 2022, and the only other split before that was in August 2020.
- The prospect of a Tesla stock split created a lot of buzz around the shares in 2022, generating speculation around the stock, even though a split is purely a financial maneuver and adds no fundamental value.
Why Doesn’t Tesla Split Its Stock?
TSLA Stock Price
Tesla (TSLA) stock is well down from all-time highs; thus, the impetus to make shares more affordable is not quite there.
If Tesla’s current stock price isn’t viewed as prohibitively high, there might not be a strong need for a split. In other words, Tesla may believe the price is already within reach for most investors.
That’s not to say a Tesla stock split date could never be announced at these prices. Historically, management has tried to bump shares out of a slump by conducting stock splits.
So, while a stock split in 2024 is possible, a more likely scenario would be in 2025 or beyond after a resumption of the prior uptrend in the TSLA price.
Management at Tesla may feel that its current stock price accurately reflects its market value, and therefore doesn’t see the necessity of a split.
A higher stock price can convey stability to investors, and Tesla may want to preserve that perception.
Earnings
Tesla’s 2023 annual earnings paint a mixed picture.
- While revenues increased by 24% year-over-year from 2022 to 2023, reaching $81.5 billion in 2023, its net profit declined.
- In 2022, Tesla had a net profit of around $12.6 billion, but in 2023, that figure dropped to approximately $10.5 billion, reflecting a 17% year-over-year decrease in profits.
This drop in profitability comes from price cuts on its vehicles to stay competitive, squeezing margins. With profits down and costs rising, Tesla’s current financial position might not justify another stock split, which usually signals strong confidence in future growth.
Elon Musk’s Distractions
It seems fair to assume that a Tesla stock split couldn’t happen without CEO Elon Musk’s approval. However, Musk appears to be preoccupied with his other ventures, from Starlink to X Corp (formerly Twitter) to SpaceX and Neuralink.
To his credit, he appears to be juggling all his ventures with sufficient verve – but a Tesla stock split is probably far down the pecking order of Elon Musk’s priorities.
More broadly, if Tesla’s top team doesn’t see any major strategic benefits from a split at this time, it might choose not to proceed with one. Without a clear advantage, they could prefer to maintain the current structure rather than change it unnecessarily.
EV Market Outlook
While the trend towards electrifying vehicles still looks to be intact, the industry is not without uncertainties. For one, the value of used Teslas has been falling, pointing to potentially falling demand as well as government discount schemes to buy new EVs, which distorts the incentives behind market pricing.
Tesla’s previous stranglehold over the EV market has also been waning as the major car manufacturers catch up. There is high demand for hybrids, and new low-cost EV competitors, mostly from China, are bringing down the average price.
What Does This Mean for Investors?
Long-term Tesla shareholders will have preserved the memory of TSLA shares north of $400 and would likely want to see a return to those levels, something a stock split closer to $200 would delay.
Tesla could theoretically do a 2-for-1 stock split at ~$200, bringing the shares back to $100 – a nice round number and affordable to most potential investors. That would mean that the adjusted Tesla record high would not be $409.97 but rather $204.99.
The possible downside of such a move would be psychological. Long-term shareholders, while understanding that the all-time high price has adjusted post-split, might still want to see the shares rise over $400—and over the pre-split record high.
Tesla Stock Split History
Tesla’s Last Stock Split
There were only two Tesla stock splits but both probably created more drama in markets than the next 10 most interesting stock splits combined.
So, both splits had their post-split dips, but the aftermath in 2022 was a bit more restrained compared to the wild ride of 2020.
- Tesla’s last stock split was its first 3-for-1 split on August 25, 2022.
- The Tesla stock price before the split (i.e., the closing price on August 24, 2022, the last trading day before the split) was around $891.
- The Tesla stock price after the split (i.e., on August 25, 2022, after the split took effect) was the opening price adjusted to around $302 per share.
How Many Times Has Tesla Stock Split?
Tesla’s stock split history involves two splits in its relatively short 14-year history as a public company since its IPO in 2010.
While this is less than most major tech companies, the smaller number largely reflects the company’s relatively young age.
For example, Microsoft has had nine stock splits since 1987, while Apple stock split five times in nearly 40 years.
Will Tesla Ever Split Its Stock Again?
Yes, based on the continued popularity of stock splits among today’s corporate board members and the historical average number of stock splits over the years of large technology companies, another Tesla stock split seems more than likely.
You hardly hear a peep about a potential Tesla stock split these days. Company execs are tight-lipped until something official gets announced, and most analysts steer clear of making any kind of Tesla stock split prediction. After all, it’s a simple yes-or-no scenario, and without any insider info, they’re just left guessing.
Top 5 Tech Stocks With Frequent Stock Splits
Among the many technology companies that have split, here are five companies that chose to make their shares more accessible, ensuring they stay in the conversation among investors given all the competition in the tech arena.
Apple (AAPL) is no stranger to stock splits, with its most recent one being a 4-for-1 split back in August 2020. They’ve done it multiple times over the years, making their shares more accessible to everyday investors.
Nvidia (NVDA) took the plunge with a 4-for-1 stock split in July 2021. This move aimed to make their rapidly climbing stock price a bit more digestible for investors, reflecting their growing dominance in the tech space.
In June 2022, Shopify (SHOP) executed a 10-for-1 stock split, aiming to attract more investors and widen its appeal. This strategic move kept the e-commerce powerhouse’s momentum going.
Salesforce (CRM) is another player in the game, with its latest stock split coming in April 2021. They opted for a 4-for-1 split to boost liquidity and make their shares more approachable to the retail investors.
Zoom (ZM) made headlines with a 2-for-1 stock split in June 2022. This move was designed to lower the price per share, making it more appealing to a wider range of investors as the company continued to grow post-pandemic.
What Is a Stock Split?
A stock split is a financial maneuver carried out by a public company to increase its number of outstanding shares, usually with the idea of boosting liquidity and affordability.
Why Are They Important to Investors?
Shareholders and potential investors in any company all have access to quantitative data like the share price and earnings history so it usually takes an understanding of the qualitative factors to pick a winning stock.
One of those qualitative factors is management, and one of the clearest signs that a company’s management cares about the share price is the introduction of financial engineering measures like stock splits or share buybacks.
The Bottom Line
You could say stock splits are a way for management to show shareholders they care. Taking actions to directly affect a share price necessarily means that management is paying attention to the share price.
As such, it might be that Tesla CEO Elon Musk symbolically shows Tesla shareholders, who might feel left out among his many other ventures, that he still cares about them.
On the flipside, with the share price well down from its record high, Tesla management may feel they have more pressing priorities.
The bigger question though is about timing. With financial markets entering the fourth quarter, time is running out for a Tesla stock split in 2024.
FAQs
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References
- 2023 Q4 Quarterly Update Deck (Digitalassets.tesla)
