Tesla’s current stock split took place on August 24 after the market closed. (Photo: 123RF)
The electric vehicle maker began to propose the possibility of a split earlier this year, and shareholders approved it during the company’s annual general meeting on August 4, 2022.
The shares will be split on a three-for-one basis, meaning investors will receive two additional shares for each share they already own. The previous split took place in August 2020, on a five-to-one basis.
Tesla’s current stock split took place on August 24 after the market closed.
The move won’t affect Morningstar’s position on the company, which our senior equity analyst values at $760 a share. After the split, the company’s fair value estimate will be adjusted to approximately $255 per share to account for the increase in the number of company shares outstanding, according to Seth Goldsteinour, our senior equity analyst.
Morningstar’s moderate moat rating, which illustrates the company’s competitive advantage over its rivals, is unchanged after the split.
Tesla stock also retains a 3-star Morningstar Rating after the split, but at a slight premium of 14% as of Aug. 23, which is still within a range Seth Goldstein considers fair.
Shares of the company have rallied in recent weeks on news of the agreement to pass the Cut Inflation Act, signed into law by President Joe Biden on Aug. 16.
“Tesla could work with suppliers to encourage the widespread construction of processing plants in the United States, but it will probably be quite a few years before the company can source enough battery materials for the majority of its vehicles qualify,” says Seth Goldstein.
Other stock splits
Tesla is one of several technology and information companies that have undertaken a stock split this year. Market leaders Amazon.com (AMZN) and Alphabet (GOOG) have already done so a few months ago. Cybersecurity firm Palo Alto Networks (PANW) will split theirs on September 14 on a three-to-one basis.