Tesla plans to seek approval for a three-for-one stock split at its annual meeting, according to a proxy filing on Friday.
The company said it wants to split its stock to make it easier for employees to manage their stock benefits, which “can help maximize shareholder value.” It also said that retail investors have “expressed a high level of interest in investing in our stock” and that a split would make the shares “more accessible” to those investors.
The announcement comes as the stock has come under pressure amid a broader market decline, in sharp contrast to Tesla’s last stock split in August 2020.
News of the 2020 split sent Tesla stock up 13 percent the next day and rallied 81 percent in the three weeks leading up to the split. In contrast, Friday’s news brought a modest 1 percent aftermarket gain.
Stock splits do not change the underlying ownership position of investors in a company and have little impact on the intrinsic value of the shares. Like Tesla, many companies argue that they make ownership more attractive to retail investors, although investment firms like Robinhood allow fractional ownership, thereby overcoming some of the downsides of a high share price.
Shares of the electric carmaker have been under pressure in recent weeks as tech stocks sold off on inflationary pressures, supply chain challenges and instability caused by the war in Ukraine. The tech-heavy Nasdaq stock index is down 25.8 percent year-to-date.
The drop in Tesla shares also comes as CEO Elon Musk is targeting an acquisition of social media company Twitter.
Tesla’s proposal follows stock splits by Amazon and Alphabet, whose shareholders approved 20-for-1 stock splits earlier this year.
Tesla also said Friday that Larry Ellison will not run for re-election to the board. The Oracle co-founder joined Tesla’s board in late 2018 for a three-year term. His term of office ends with the company’s annual general meeting on August 4th.
“The board currently anticipates reducing the number of board seats to seven following the expiry of Mr. Ellison’s term at the 2022 annual meeting,” the company said in the filing.
Ellison owns a 1.5 percent stake in Tesla, which he disclosed when he joined the board. He has pledged $1 billion to help Musk fund his Twitter acquisition and will be part of a group of financiers helping the Tesla boss secure funding to complete the $44 billion deal to back up.