What happened
Electric car star Tesla (TSLA 0.94%) floated plans this morning to "increase ... the number of authorized shares of common stock ... in order to enable a stock split of the Company's common stock in the form of a stock dividend." Don't be confused by the terminology: A "stock dividend" is just another way of saying that Tesla wants to split its stock, awarding folks who already own Tesla shares some extra shares -- it doesn't affect the value of those shares, and it doesn't imply the paying of any actual dividends.
Nevertheless, Tesla stock responded immediately, up 8% as of 11 a.m. ET.
Image source: Getty Images.
So what
Tesla's announcement didn't come in the form of just another maybe-he's-serious, maybe-he-isn't Elon Musk tweet this time, either. This time, Tesla formally announced its intentions in an 8-K filing with the Securities and Exchange Commission (SEC), saying it will let its shareholders vote on the issuance of new shares at the company's upcoming 2022 Annual Meeting of Stockholders (on a date yet to be determined).
Given how enthusiastically shareholders have responded to the announcement this morning, I'd say it's a safe bet that when the question comes up for a vote, those stockholders will respond with a resounding "yes!"
Now what
Tesla's stock split is obviously the big news today, and the news most investors are reacting to. It's not, however, the only news that investors should pay attention to.
It was also announced today that Tesla has shut down production at its Shanghai Gigafactory for another four days "to carry out mass testing for COVID-19," according to Reuters. Coming on top of March's two-day shutdown for the same reason, this adds up to nearly a week of lost time for Tesla -- potentially costing the company as much as 20% of one month's production.
