Aug 25 (Reuters) – Tesla Inc’s (TSLA.O) shares slipped on Thursday as a three-for-one stock split announced by the world’s most valuable automaker to woo retail investors took effect.
Shares of the electric-car maker, led by Elon Musk, opened at $302 and dipped to $293 in early trading.
Tesla’s second stock split in as many years follows those by other high-growth companies, including Amazon.com (AMZN.O) and Google-parent Alphabet (GOOGL.O), and highlight the increasing need to diversify investor base.
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Stock splits “certainly have a higher appeal to retail investors, and makes their options more affordable as well,” said Art Hogan, chief market strategist at B. Riley.
“Retail investors are a very important cohort for Tesla, and today’s stock split is essentially an acknowledgment of that fact.”
Austin-based Tesla had debuted at $17 in 2010 and shares sky-rocketed to trade at more than $2,000 at their peak, becoming among the highest priced on Wall Street and making it difficult for small investors to bet on the high-growth stock.
In August 2020, the company decided to split its stock on a five-for-one basis, and breached the $1 trillion in market capitalization in 2021.
The stock closed at $891.29 on Wednesday before the three-for-one split took effect.
The EV maker is the sixth company in the S&P 500 index to have split its shares this year, according to Howard Silverblatt, senior index analyst for S&P and Dow Jones indices.
Tesla’s ticker was trending on social media stocktwits.com, indicating increased chatter among individual investors.
The company’s shares have fallen about 11% since the company announced in March plans to increase its number of shares.
“In typical buy-the-rumor, sell-the-news style, investors tend to drastically scale back purchases of splitting stocks in the weeks ensuing the effective split date, causing price momentum to slow,” analysts at Vanda Research said in a note.
Tesla shares have risen to take the company’s market cap to over $1 trillion since its previous split
A stock split does not affect the fundamentals of a company, but makes it easier for individual investors looking to do small trades. However, the benefits of stock splits are becoming less clear as brokerages let customers buy parts of a company’s share.
Tesla’s shares have fallen about 16% this year as worries over aggressive U.S. interest rate increases and geopolitical uncertainty triggered a sell-off in high-growth stocks.
The latest three-for-one split means that stockholders will get two additional shares for each they owned as of Aug. 17.
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Reporting by Akash Sriram and Medha Singh in Bengaluru; Additional reporting by Devik Jain; Editing by Sriraj Kalluvila
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Aug 4 (Reuters) – Tesla Inc (TSLA.O) shareholders voted for board recommendations on most issues at the company’s annual meeting on Thursday, including re-electing directors, approving a stock split, while rejecting proposals focused on environment and governance.
Votes on three of the 13 proposals did not follow board recommendations, according to preliminary tallies presented at the annual shareholder meeting in Austin, Texas.
Over board opposition, shareholders passed an advisory proposal that would increase investors’ ability to nominate directors.
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Two board proposals – cutting directors’ terms to two years and eliminating supermajority requirements – did not receive supermajorities necessary to pass.
Dressed in black, Chief Executive Elon Musk heavily influenced the voting and spoke to an enthusiastic crowd after the vote. He owns 15.6% of Tesla, according to Refinitiv data, after selling millions of shares last year. read more
Investors approved a three-for-one stock split. While a split does not affect a company’s fundamentals, it could buoy the share price by making it easier for investors to own the stock.
Shareholder proposals that failed included ones arguing for endorsing the right of employees to form a union, asking the company to report its efforts in preventing racial discrimination and sexual harassment annually, as well as reporting on water risk.
A proposal asking directors to enable large and long-term stockholders or groups with at least 3% of the shares to nominate directors, cleared objections from the board. The board had earlier said a proposal like this could create opportunities for special interests to skew Tesla plans.
Musk said the company aimed to hit a production run rate of 2 million vehicles per year by the end of 2022 and would continue building factories.
Tesla has factories in California and Shanghai and is ramping up two more in Austin, Texas and Berlin. Musk said Tesla might be able to announce an additional factory this year and he expected eventually to have 10-12 so-called gigafactories.
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Reporting by Ankur Banerjee and Akash Sriram in Bengaluru; additional reporting by Peter Henderson in Oakland and Kevin Krolicki in Detroit; Editing by Anil D’Silva
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Signage is seen at a GameStop in Manhattan, New York, U.S., December 7, 2021. REUTERS/Andrew Kelly
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July 6 (Reuters) – GameStop Corp’s (GME.N) board has approved a four-for-one stock split that will make it more affordable for investors to own shares of the video-game retailer at the center of last year’s “meme stock” trading frenzy.
Shares of the company shot up 5.8% to $124.49 in extended trading on Wednesday after the announcement.
Several major U.S. companies have opted for stock splits over the past two years, including Apple (AAPL.O), Tesla (TSLA.O) and Amazon.com (AMZN.O).
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A stock split makes shares more affordable for individual investors by lowering the price without affecting the company’s valuation.
Shares of GameStop skyrocketed more than 680% in 2021 thanks to retail traders on social media platforms such as Reddit who snapped up heavily shorted stocks in a bid to squeeze out hedge funds betting against them.
“GameStop management knows that they have a 100% retail shareholder base and so, they are catering to them,” said Wedbush Securities analyst Michael Pachter.
“It (the stock split) is also a distraction because the NFT market is dead, and that was the last thing that they did that tried to get people excited.”
This year, the video-game retailer’s shares have wound down roughly 20% as the Ukraine crisis and fears of a global recession clouded sentiment.
The company said in March it would seek shareholder approval for the split which would increase its outstanding Class A common shares to 1 billion from 300 million.
Under the split, shareholders will receive a stock dividend of three additional shares of GameStop’s Class A common stock for each share held. read more
The dividend will be distributed after markets close on July 21.
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Reporting by Chavi Mehta in Bengaluru; Editing by Devika Syamnath
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The logo of Tesla is seen in Taipei, Taiwan August 11, 2017. REUTERS/Tyrone Siu
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June 10 (Reuters) – Electric vehicle maker Tesla Inc (TSLA.O) on Friday proposed a three-to-one stock split, making its shares more affordable following recent sell-offs of the most valuable automaker.
The company also said Oracle Corp co-founder Larry Ellison, a friend of Tesla Chief Executive Officer Elon Musk, will not stand for re-election to Tesla’s board when his term ends at this year’s shareholder meeting.
Ellison is among the top investors who have promised funding toward Musk’s $44 billion acquisition of social media firm Twitter Inc .
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Shares of Austin, Texas-based Tesla rose more than 1% in extended trading on Friday. They have fallen nearly 40% since Musk unveiled his stake in Twitter in early April, hurt in part by a strict lockdown in Shanghai that has affected Tesla’s production.
Shareholders will vote on Tesla’s proposed stock split on Aug. 4. If approved, it would be the company’s first such action after a five-for-one split in August 2020. read more
Tesla said the split would enable its employees to “have more flexibility in managing their equity” and make its stock “more accessible to our retail shareholders.”
Alphabet Inc (GOOGL.O), Apple Inc (AAPL.O)and Amazon.com Inc(AMZN.O)have also recently split their shares.
While a split has no bearing on a company’s fundamentals, it could buoy the share price by making it easier for a wider range of investors to own the stock.
Tesla will also ask shareholders to vote to reduce its board of directors’ terms to two years from three. If approved, the terms would be staggered over two years.
UNION
Meanwhile, proposals by Tesla shareholders include corporate governance-related items such as the right of employees to form a union and Tesla’s efforts to prevent sexual harassment and racial discrimination.
“In 2021, the National Labor Relations Board upheld a 2019 ruling that Tesla illegally fired a worker involved in union organizing, and that the CEO had illegally threatened workers regarding unionization,” according to a stockholder proposal cited in Tesla’s filing.
In March, Musk invited labor union United Auto Workers (UAW) to hold a vote at Tesla’s California factory. But “Tesla does not have any formal policy commitments to respect the right to freedom of association, nor has it demonstrated how it would effectively operationalize such a commitment,” the proposal said.
Tesla’s board advised a vote against the proposal, saying Tesla recently increased the base pay for its manufacturing jobs and it is “actively engaged” in protecting employees’ rights.
Shareholders also proposed an annual report on Tesla’s efforts to prevent sexual harassment and racial discrimination after it was hit by a string of lawsuits.
A California civil rights agency filed a lawsuit accusing Tesla of failing for years to address widespread racist conduct at its Fremont assembly plant.
Tesla said it does not “tolerate discrimination, harassment, retaliation or any mistreatment of employees in the workplace.”
Another resolution asked Tesla to evaluate the “impact of Tesla’s current use of arbitration on the prevalence of harassment and discrimination in its workplace.”
Shareholders also called on the company to report its polices to address perceived lack of gender and racial diversity at its board.
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Reporting by Akash Sriram in Bengaluru and Hyunjoo Jin in San Francisco; Editing by Shinjini Ganguli, Matthew Lewis and Richard Chang
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The logo of Amazon is seen at the company’s logistics center in Bretigny-sur-Orge, near Paris, France, December 7, 2021. REUTERS/Gonzalo Fuentes/Files
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NEW YORK, June 6 (Reuters) – Amazon’s (AMZN.O) stock split may provide some solace to shareholders who have seen the e-commerce giant’s shares battered this year.
Amazon shares were up 3.1% to $126.17 in afternoon trading after the 20-for-1 split, announced earlier this year but which took effect Monday. They have fallen 24% year-to-date, roughly comparable to the loss in the Nasdaq Composite (.IXIC), as rising interest rates slam risk appetite and pressure shares of high-growth companies.
While a split has no bearing on a company’s fundamentals, it could help buoy its share price by making it easier for a wider range of investors to own the stock, market participants said.
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“Stock splits are certainly associated with successful stocks,” said Steve Sosnick, chief strategist at Interactive Brokers. “The psychology remains that stock splits are good. We can debate whether they are or aren’t, but if the market perceives them to be a positive, then they act like a positive.”
Analysts at MKM Partners believe the rally in Amazon shares since May, during which they have cut their year-to-date loss by a third, has been aided by anticipation of the split.
“While we view this event as a largely non-fundamental one, we believe a stock split and potential retail trading activity could provide an incremental catalyst to turn sentiment on AMZN shares,” MKM’s Rohit Kulkarni said in a note on Monday.
Stock splits may drive additional participation from retail investors, who, on average, tend to trade in smaller sizes due to their limited capital, relative to institutional investors, according to a Cboe report published in May.
The effect was most pronounced for stocks with larger market capitalization, according to the report, which analyzed 61 stocks across all market capitalization categories that have split since 2020.
Peng Cheng, head of big data and AI strategies at JPMorgan, said retail investors’ ownership in Amazon’s shares had been comparatively low, compared to robust retail activity in the company’s options – a sign that a four-digit share price may have been turning off individual traders.
“Psychologically, it doesn’t feel good to spend $1,000 and own a third of a share,” he said.
BofA Global Research has found that splits “historically are bullish” for companies that enact them, with their shares marking an average return of 25% one year later versus 9% for the market overall.
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Stock splits may increase the pool of investors able to dabble in options, especially for stocks with high dollar value, analysts said.
For instance, on Friday, a trader looking to bet on Amazon shares rising by 12% by July 1 would have had to pay roughly $2,900. On Monday, a bet on the same percentage gain in the shares by July 1 cost about $135, according to Reuters calculations.
Still, options are not quite as big a force in the market as they were last year at the height of the so-called meme-stock mania.
“Had this happened a year ago, when individual traders were enamored with call speculation in a way none of us had seen before, this would have been much more explosive,” Sosnick said.
stock splits
Of course, a stock split alone is unlikely to overcome the host of other factors that have driven shares lower this year, including worries over tighter monetary policy and decades-high inflation.
At the same time, the rise of commission-free trading and the advent of fractional shares have taken away some of the immediate appeal of stock splits for investors, said Randy Frederick, vice president of trading and derivatives for the Schwab Center for Financial Research.
“It’s not nearly as big a deal as it used to be in the old days,” Frederick said.
Amazon is the latest megacap company to split its stock. Other companies that have split their shares since 2020 include Apple (AAPL.O), Tesla (TSLA.O) and Nvidia (NVDA.O).
Alphabet Inc (GOOGL.O) also announced a 20-for-1 stock split in February, with its split expected to take effect next month.
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Reporting by Saqib Iqbal Ahmed and Lewis Krauskopf; Additional reporting by John McCrank; Editing by Ira Iosebashvili and Nick Zieminski
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March 28 (Reuters) – Tesla Inc (TSLA.O) will seek investor approval to increase its number of shares to enable a stock split in the form of a dividend, the electric-car maker said on Monday, sending its shares up about 5%.
The proposal has been approved by its board and the shareholders will vote on it at the annual meeting. The stock split, if approved, would be the latest after a five-for-one split in August 2020 that made Tesla shares cheaper for its employees and investors.
Following a pandemic-induced rally in the technology shares, Alphabet Inc (GOOGL.O), Amazon.com Inc (AMZN.O) and Apple Inc (AAPL.O) too have in the recent past split their shares to make them more affordable.
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Tesla shares soar after stock split in 2020 Tesla shares soar after stock split in 2020
“This (stock split) could further fuel the bubble in Tesla’s stock that has been brewing over the past two years,” said David Trainer, Chief Executive of investment research firm New Constructs.
Tesla has delivered nearly a million electric cars annually, while ramping up production by setting up new factories in the Austin and Berlin amid increasing competition from legacy automakers and startup companies.
“We think Berlin ramping, and both the MiniCar and India are on the horizon, we would agree with the timing,” Roth Capital analyst Craig Irwin said, hinting that companies usually execute stock splits when a good news is ahead.
Meanwhile, Tesla on Monday notified its suppliers and workers that its Shanghai factory in China will be closed for four days as the financial hub said it would lock down in two stages to carry out mass COVID-19 testing. read more
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Reporting by Nivedita Balu and Akash Sriram in Bengaluru; Editing by Maju Samuel and Arun Koyyur
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The logo of Amazon is seen at the company’s logistics center in Bretigny-sur-Orge, near Paris, France, December 7, 2021. REUTERS/Gonzalo Fuentes
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March 9 (Reuters) – Amazon.com Inc said on Wednesday its board approved a 20-for-1 split of the e-commerce giant’s common stock and authorized a $10 billion buyback plan, sending the company’s shares up 7% in extended trading.
This is the first stock split by Amazon since 1999 and will give investors 19 additional shares for every share they hold. Trading based on the new share price will begin on June 6.
Amazon’s share split is similar to the one announced by Google parent Alphabet Inc (GOOGL.O) last month. Several mega cap companies such as Apple Inc (AAPL.O), Tesla (TSLA.O) and Nvidia (NVDA.O) have split their stocks since 2020.
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Amazon’s stock, which closed at $2,785.58 on Wednesday, has nearly doubled over the last two years, when demand for both its e-commerce and cloud computing business surged in the wake of the COVID-19 pandemic.
“This split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company,” an Amazon spokesperson said.
The stock buyback replaces the previous $5 billion stock repurchase authorized by Amazon’s board in 2016, under which the company had repurchased $2.12 billion of its shares.
After shares declined about 16% amid a tech rout this year, the company’s market capitalization stood at roughly $1.4 trillion as of last close.
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Reporting by Chavi Mehta in Bengaluru and Jeffrey Dastin in Palo Alto, Calif.; Editing by Shailesh Kuber
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The logo for Google LLC is seen at the Google Store Chelsea in Manhattan, New York City, U.S., November 17, 2021. REUTERS/Andrew Kelly/File Photo
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Feb 1 (Reuters) – Google parent Alphabet Inc (GOOGL.O) reported record quarterly sales that topped expectations on Tuesday, as its internet advertising business surged on consumers using Google search as they shopped online and advertisers upping their marketing budgets.
Alphabet’s shares jumped more than 8% in after-hours trading, also rising on the company’s announcement that it would undertake a 20-to-one stock split.
The results were the latest to reinforce that the global trend toward a more digital economy has made Big Tech companies resistant to small-market shocks. While concerns about rising inflation, COVID-19 variants and supply-chain shortages have rattled Wall Street and hurt sales at some businesses, the companies that control key gateways to e-commerce, hybrid work and streaming entertainment have not seen a dip since the early days of the pandemic.
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Alphabet’s sales jumped 32% to $75.3 billion in the fourth quarter, for a third straight quarterly sales record and topping the average estimate of $72 billion among financial analysts tracked by Refinitiv.
Consumers dove into Google search looking for apparel and hobbyist items, while retail, finance, entertainment and travel advertisers raised marketing budgets, Google’s chief business officer, Philipp Schindler, said on an earnings call.
Analysts said Google, which generates more revenue from internet ads than any other company, is proving that its growth is unstoppable for the foreseeable future.
“The pandemic has handily accelerated the world’s reliance on digital advertising,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown. “Sitting through traditional TV advert breaks or reading billboards suddenly feels completely archaic in the age of streaming and mobile phone addiction.”
Shares of Alphabet rose 8.6% in after-hours trading, to $2,990.10, erasing their losses for the year-to-date. Shares of competitors in online ads including Facebook owner Meta Platforms Inc (FB.O), Twitter Inc (TWTR.N), Trade Desk Inc (TTD.O) and Snap Inc (SNAP.N) all rose as well.
Under the planned 20-for-one stock split, investors as of July 1 will receive 19 additional shares for each one held. The split, which is subject to shareholder approval, will make the stock more affordable and potentially eligible for inclusion in more market indexes.
Shares of Apple Inc (AAPL.O) and Tesla Inc (TSLA.O) rallied in 2020 after splits, but increasingly brokerages such as Robinhood Markets (HOOD.O) allow purchases of fractional shares, diminishing some benefit of the tactic.
BANNER YEAR
For the 2021 full year, Alphabet’s sales rose 41% to a record $258 billion. Sales had grown just 13% in 2020, the slowest rate in over a decade, after advertisers slashed spending in the first few weeks of the pandemic.
Across both 2021 and 2020, Google’s advertising business, including YouTube, accounted for 81% of Alphabet’s revenues.
Companies including Amazon.com Inc and ByteDance’s TikTok have been taking small pieces of Google’s share of the global advertising market. But market forecasters do not expect major slippage in Google’s leading position. Google’s secondary businesses, including Cloud, also have been lifting overall sales.
Google Cloud, which serves clients such as online shopping software maker Shopify Inc (SHOP.TO), increased quarterly revenue by 45% to $5.5 billion, above estimates of $5.4 billion.
The division’s operating loss narrowed by 45% to $3.1 billion in 2021.
Alphabet Chief Executive Sundar Pichai told analysts that Cloud is exploring how to support clients that want to use blockchain, one of several emerging technologies that proponents view as crucial to kickstarting a new era of online innovations.
Alphabet also reported a quarterly sales record during the holiday season for its Google Pixel smartphones, despite what Pichai called “extremely challenging” supply constraints.
Alphabet’s quarterly profit was $20.6 billion, or $30.69 per share, beating expectations of $27.56 per share and marking a fourth straight quarter of record profit. The profit benefited from unrealized gains from Alphabet’s investments in startups, and the company also got a $2 billion boost last year from extending the useful life of its servers and networking gear.
For the 2021 year, Alphabet’s profit increased 89% to $76 billion.
Alphabet’s total costs in 2021 increased 27% to $178.9 billion as the company began to resume its pre-pandemic pace of hiring and construction. The company also noted increased legal fees, costs from a one-time bonus of $1,600 to all employees, and a rise in charitable contributions as it matched increased giving by employees.
Numerous lawsuits accusing Google of anticompetitive conduct in the advertising and mobile app store markets continue to be one of the company’s biggest challenges. Google already has said its efforts to lower Play app store fees to assuage some of the concerns will hurt revenue.
Alphabet’s cash hoard grew by nearly $3 billion in 2021 to $139.6 billion, with another $50 billion going to buying back shares.
The operating loss for Other Bets, a unit that includes self-driving technology company Waymo and other non-Google ventures, was $5.3 billion in 2021, widening from $4.5 billion in 2020. The company offered no 2022 financial outlook for the unit.
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Reporting by Nivedita Balu in Bengaluru and Paresh Dave in Oakland, Calif.;
Additional reporting by Diane Bartz in Washington and Noel Randewich in Oakland, Calif.;
Editing by Anil D’Silva, Matthew Lewis and Leslie Adler
Our Standards: The Thomson Reuters Trust Principles.
