Tesla (TSLA) announced Monday that it will ask shareholders to vote at this year’s annual meeting to authorize additional shares in order to enable a stock split. Meanwhile, Tesla paused production at its China plant due to a surge in Covid cases. And CEO Elon Musk tweeted on Monday that he contracted the virus again. Tesla stock jumped.
Tesla said in an 8-K filing with the Securities & Exchange Commission that it wants the stock split so it can pay a dividend to shareholders. The company’s annual meeting will likely take place around October.
The EV maker’s last 5-to1 stock split occurred in August 2020. Shares have more than doubled since then.
Wedbush analyst Daniel Ives said the move was to be expected, given robust electric-vehicle demand and the company’s buildout of its Berlin and Austin plants. Tesla opened its Berlin factory last week in Germany. It expects to hold an event to officially open its Austin plant on April 7.
“Initiating its second stock split in two years is a smart strategic move that will be a positive catalyst for (Tesla) shares,” Ives said in a note to clients Monday.
The stock-split news comes as Tesla China halts production due to rising Covid infections, according to a Reuters report. Shanghai officials are locking down the financial hub for four days to carry out mass testing for the virus.
At first, Tesla tried to create a closed loop to continue production and called workers in on Sunday, the report said. However, workers were allowed to leave Sunday evening because the company did not have enough provisions for them.
Tesla did not respond to a request for comment on the matter.
Tesla, a Leaderboard stock, had been slumping from the beginning of the year through mid-March, losing 28% of its value. But shares have since reversed, reclaiming most of those losses. However they’re still around 14% below their 52-week high of $1,243.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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