Tesla 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.
Ives views Tesla's plans for a split as following in the footsteps of tech giants such as Amazon, Google and Apple.
"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 Stock
Shares gapped up 7.6% to above $1,086 on the stock market today. Tesla stock has a 1,208 cup-base buy point, according to MarketSmith.
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.
Tesla's relative strength line is trending upward again. Its RS Rating is 94 out of a best possible 99. Its EPS Rating is 75.
Among other U.S.-based EV makers, Rivian fell 1% on Monday, while Lucid added a fraction.
General Motors rose 1% and Ford ticked up 0.8%.
China-based Nio popped 6.2%, Xpeng inched down and Li Auto added 0.3%. Warren Buffett-backed BYD traded up almost 1%.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
