In order to simplify ownership accessibility to small investors, Tesla unveiled plans for a 3-in-1 stock split to a shareholder vote on Friday. The announcement was made after the EV manufacturer filed its annual proxy statement with the SEC.
A three-in-one stock split implies that if an individual owns one Tesla share, they will get two more. This move does not come as a surprise because the company hinted in March that it intends to seek shareholder approval for a stock split, but no other details were provided.
"We believe the Stock Split would help reset the market price of our common stock so that our employees will have more flexibility in managing their equity." The EV maker wrote in the regulatory filing.
America's largest auto maker by market value, Tesla noted that its stock price increased by 43% since the last stock split and hence decided to lower the price per share which will help accessibility with employee stock options and retail investors.
According to Electrek news, in August 2020, the company split its stock 5-for-1, at the time, Tesla's stock was trading at around $1,300 a share, but the stock-split announcement reported a record high of $2,000 per share.
The EV maker's shares have reported a fall from November as it lost about a month of production in China because the spread of Covid-19 forced the Shanghai plant to shut down in March. The stock split announcement however, brought about a 1% increase and the shares closed down at $696.69 on Friday.
In the proxy filing, the EV maker also mentioned that Tesla's board will 'shrink to seven seats' as Larry Ellison, co-founder of Oracle Corp., will not stand for re-election because his term expires this year, the Wall Street Journal reported.
Along with Tesla, two other US tech giants have opted for a stock split this year. Amazon went for a 20-for-1 split after receiving a nod from the shareholders in May. Alphabet also proposed the same deal, which was approved earlier this month and will be implemented in mid-July.