Insights

The Timing of Tesla’s Stock Split Could Be in Jeopardy

Tesla (NASDAQ: TSLA) is no stranger to the spotlight, and the company turned heads earlier this year when the electric vehicle maker revealed plans for a second stock split, less than two years after its first. Investors will recall Tesla’s first paring of its shares, a 5-for-1 stock split, took place in Aug. 2020.
A regulatory filing in March detailed the company’s plans, which would require shareholder approval to increase the number of authorized shares. However, Tesla just missed a key regulatory deadline, which could delay its stock split ambitions.
Image source: Tesla.

The devil is in the details
In a regulatory filing this week, Tesla said it would miss the required deadline to file a proxy statement: 

We currently expect that our definitive proxy statement for the 2022 annual meeting of stockholders will be filed later than the 120th day after the end of the last fiscal year.

The deadline for submitting the document slipped by on April 30, without the necessary filing. Tesla didn’t provide specific details about when it plans to submit its proxy statement.
Delay of game?
A proxy statement is a document companies are required to provide to investors with details regarding upcoming shareholder meetings. This includes the timing and location of the event and any matters subject to approval that will be submitted to shareholders for a vote. This can includes such issues as management and executive compensation, elections for the board of directors, or changes to number of authorized shares of stock. 
In Tesla’s case, the company plans to request shareholder approval at the company’s annual stockholder meeting to increase its share count, which will be necessary prior to the enactment of a stock split.
In a regulatory filing earlier this week, Tesla announced plans to hold its 2022 Annual Meeting of Stockholders in Austin, Texas on Aug. 4, 2022. The electric car maker also said it would provide additional details regarding the annual meeting in its definitive proxy statement, but was mum on when shareholders could expect the filing. 
Blame it on Twitter
The timing of the delay suggests that CEO Elon Musk may be distracted with other matters. Just last month, the enigmatic chief executive announced plans to acquire social media platform Twitter (NYSE: TWTR) in a deal valued at $44 billion. Twitter’s board of directors subsequently approved the deal. 
Since then, Musk has been scrambling to line up financing for the acquisition, initially selling $8.4 billion is Tesla stock. A regulatory filing that dropped this week detailed a laundry list of investors Musk has assembled to support the deal, raising an additional $7 billion. 
All this deal making could be taking a toll on Musk’s time, which could explain the proxy filing delay. The announcement of Tesla’s annual meeting is a step in the right direction, but investors are decidedly less excited about the company’s stock split prospects this time around.
What now?
There was a great deal of enthusiasm when Tesla announced its 5-for-1 stock split in Aug. 2020, with shares surging 81% between the time of the announcement and the completion of the split three weeks later. However, since the company announced plans to pare its shares earlier this year, Tesla stock has fallen roughly 18%, likely dragged lower by the broader market correction and the Nasdaq bear market.
I’ve argued before that stock splits don’t change the underlying fundamentals of the business. That said, there are still plenty of reasons to be bullish about Tesla stock. The company reported robust deliveries in the first quarter followed by record earnings. This suggests that despite the delay in Tesla’s stock split, the stock is still a buy.
Danny Vena has positions in Tesla. The Motley Fool has positions in and recommends Tesla and Twitter. The Motley Fool has a disclosure policy. –

Tesla (NASDAQ: TSLA) is no stranger to the spotlight, and the company turned heads earlier this year when the electric vehicle maker revealed plans for a second stock split, less than two years after its first. Investors will recall Tesla’s first paring of its shares, a 5-for-1 stock split, took place in Aug. 2020.

A regulatory filing in March detailed the company’s plans, which would require shareholder approval to increase the number of authorized shares. However, Tesla just missed a key regulatory deadline, which could delay its stock split ambitions.

Image source: Tesla.

The devil is in the details

In a regulatory filing this week, Tesla said it would miss the required deadline to file a proxy statement: 

We currently expect that our definitive proxy statement for the 2022 annual meeting of stockholders will be filed later than the 120th day after the end of the last fiscal year.

The deadline for submitting the document slipped by on April 30, without the necessary filing. Tesla didn’t provide specific details about when it plans to submit its proxy statement.

Delay of game?

A proxy statement is a document companies are required to provide to investors with details regarding upcoming shareholder meetings. This includes the timing and location of the event and any matters subject to approval that will be submitted to shareholders for a vote. This can includes such issues as management and executive compensation, elections for the board of directors, or changes to number of authorized shares of stock. 

In Tesla’s case, the company plans to request shareholder approval at the company’s annual stockholder meeting to increase its share count, which will be necessary prior to the enactment of a stock split.

In a regulatory filing earlier this week, Tesla announced plans to hold its 2022 Annual Meeting of Stockholders in Austin, Texas on Aug. 4, 2022. The electric car maker also said it would provide additional details regarding the annual meeting in its definitive proxy statement, but was mum on when shareholders could expect the filing. 

Blame it on Twitter

The timing of the delay suggests that CEO Elon Musk may be distracted with other matters. Just last month, the enigmatic chief executive announced plans to acquire social media platform Twitter (NYSE: TWTR) in a deal valued at $44 billion. Twitter’s board of directors subsequently approved the deal. 

Since then, Musk has been scrambling to line up financing for the acquisition, initially selling $8.4 billion is Tesla stock. A regulatory filing that dropped this week detailed a laundry list of investors Musk has assembled to support the deal, raising an additional $7 billion. 

All this deal making could be taking a toll on Musk’s time, which could explain the proxy filing delay. The announcement of Tesla’s annual meeting is a step in the right direction, but investors are decidedly less excited about the company’s stock split prospects this time around.

What now?

There was a great deal of enthusiasm when Tesla announced its 5-for-1 stock split in Aug. 2020, with shares surging 81% between the time of the announcement and the completion of the split three weeks later. However, since the company announced plans to pare its shares earlier this year, Tesla stock has fallen roughly 18%, likely dragged lower by the broader market correction and the Nasdaq bear market.

I’ve argued before that stock splits don’t change the underlying fundamentals of the business. That said, there are still plenty of reasons to be bullish about Tesla stock. The company reported robust deliveries in the first quarter followed by record earnings. This suggests that despite the delay in Tesla’s stock split, the stock is still a buy.

Danny Vena has positions in Tesla. The Motley Fool has positions in and recommends Tesla and Twitter. The Motley Fool has a disclosure policy.

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