Tesla, Inc. (NASDAQ:TSLA) CEO Elon Musk's SpaceX venture has built up a mammoth valuation even without a public listing. It now appears that the space exploration company is planning to implement a split of its privately-held shares.
What Happened: SpaceX is proposing to split the shares in a 10-for-1 ratio, CNBC reported, citing a company-wide email. This would mean the value of each share, which is at $560, based on its most recent sale, will be reduced to $56 per share, the report said.
Stock splits have little impact on the fundamentals of the company or the stock price. Publicly-traded corporations split their shares when the stock price rises to a level at which it becomes unaffordable for retail buyers.
Why It's Important: SpaceX' valuation reportedly shot past the $100 billion mark in Oct. 2021. This was based on the pricing of a secondary sale offering done by the company. At that time, it was said the company was the most valued private firm after TikTok owner ByteDance.
SpaceX operates in a high-risk, capital-intensive industry. The company is developing Starship, a super heavy-lift launch system for interplanetary spaceflight, and Starlink, a mega-constellation made up of small satellites to provide commercial Internet service. In early February, Starlink began offering a premium broadband service, which has more than double the antenna capability of the standard option and is five times costlier than the standard option.
Tesla closed Friday's session down 2.21% at $856.98
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