November 15, 2024
Telsa

Tesla left its devoted following of retail investors in the lurch over plans for an upcoming stock split after missing a key regulatory deadline.

In late March, the company said its board would seek shareholder approval for its second split in two years, but stopped short of providing the concrete ratio. Instead it promised additional details would be provided as part of its “definitive proxy statement”, essentially the agenda for an upcoming annual meeting.

The SEC’s required time limit for filing, however, expired over the weekend, forcing Tesla to warn it would need an extension.

“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,” it said in an updated regulatory filing made public on Monday.

Coming so soon on the heels of Elon Musk’s $44 billion Twitter bid, the delay reignites an ongoing debate as to whether Musk may be overextending himself.

Apart from retweeting Tesla’s official announcement that the AGM will take place on Aug. 4, the workaholic CEO has focused his recent social media postings on the broader political fallout of his high profile takeover.

A Reuters report from Monday citing informed sources suggests Musk is currently in negotiations with large investment firms and high net-worth individuals about taking on more financing for his Twitter deal in order to tie up less of his personal wealth. Last week he sold roughly 9.64 million shares, worth around $8.5 billion to help fund his plans for the social media platform.

No direct effect

Details on the stock split—which does nothing but optically lower the price of each share—is key for many, because Tesla is beloved chiefly among retail investors.

Vanda Research named it as one of the top ten favorites of small shareholders alongside names like Apple, Chinese EV maker NIO, data miner Palantir and meme stock AMC Entertainment.

By comparison, portfolio managers generally pay little heed to stock splits as they have no direct effect on either a company’s underlying fundamentals or its valuation.

According to data from Nasdaq, institutionals own only about 42% of Tesla versus, for example, 78% for Meta, another mega-cap tech stock with a dominant shareholder as its CEO.

A lot of that has to do with Tesla’s stratospheric price-to-earnings multiples that has attracted big name short sellers like Kynikos Associates’ Jim Chanos, Greenlight Capital’s David Einhorn and Michael Burry of The Big Short fame.

At its current price of $902.94, Tesla trades at a very aggressive 73 times consensus 2022 estimates. It is set to open Tuesday roughly flat, in line with minor gains in Nasdaq futures.

The stock split would be the EV pioneer’s second. In August 2020, the company issued four new shares for each existing one investors owned.

Fortune.com

65 thoughts on “Elon Musk keeps investors in dark about Tesla stock split plans after missing SEC deadline

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