As Tesla prepares for another stock split, analysts are pondering what to expect from retail investors. At the same time, many retail investors are also wondering if it’s worth upping their portion of the automaker’s shares before the stock split.
Tesla’s impressive first-quarter earnings and overall valuation could trigger another surge in retail investors ahead of an upcoming stock split, according to The Motley Fool. Tesla’s growth compared to auto industry standards has the automaker valued at around 4.4 times the market capitalizations of General Motors, Ford and Volkswagen combined — and it’s growing still.
In its first-quarter earnings results, Tesla posted $16.86 billion in revenue, representing an 87-percent increase year-over-year. Net operations cash flow surged by 143 percent to almost $4 billion, and the automaker produced 305,407 vehicles and delivered 310,048 total, with these figures jumping by around 69- and 68-percent, respectively.
Last month, Tesla shared a question forum for investors to ask and vote on questions prior to the Q1 earnings call using the platform Say Technologies, and the top question was regarding the stock split with 6,900 upvotes.
It isn't yet clear at what ratio a stock split would occur, though it was one of many questions left unanswered on the forum.
Tesla filed an 8-K with the Securities and Exchange Commission in late March, and it said it would likely seek shareholder approval to increase the authorized share capital to make room for an upcoming stock split, as reported by Benzinga ahead of the company’s Q1 earnings call.
Above: Wedbush Securities' Dan Ives joins 'Squawk Box' to discuss Tesla's upcoming stock split (YouTube: CNBC Television)
The last time Tesla conducted a stock split was in August 2020, and the company split the shares at a ratio of five-for-one. Between the split’s announcement and the day it was completed, Tesla’s shares jumped 80 percent.
Individual retail investors considering Tesla’s stock may also want to consider their own appetite for risk, because there’s no denying it’s a fairly high-risk stock. Still, while volatility for the stock may be high, many analysts are banking on big-buck benefits down the road with Tesla’s upcoming plans for Robotaxis, the Tesla robot, and the establishment of its new Gigafactories in Austin, Texas and Grünheide, Germany.
Some analysts, like Ark Invest’s Cathie Wood, have staked high price targets on Tesla’s claims that it would have a functional business model surrounding the Robotaxi alone. Wood has a bullish price target of $4,600 by 2026 for Tesla, expecting around 60 percent of the company’s expected value to come from its Robotaxi business.
In response to a question about the Robotaxi, Tesla CEO Elon Musk said the automaker would aim for volume production in 2024.
In the response, Musk wrote, “So, I think we want to hold up on — we don’t want to jump the gun on an exciting product announcement too much. So, I think, we’ll aim to — we do a product event for robotaxi next year and get into more detail, but we are aiming for volume production in 2024.”