The U.S. equity market has been facing tough times in 2022. With inflation reaching a 40-year high in June 2022, worries of rising interest rates slowing down the economy and escalating geopolitical tensions across the world, the benchmark S&P 500 has reported its worst first-half-year performance in the past 52 years.

Despite this, investors have remained keen on stock splits wherein a publicly traded company increases its outstanding share count without changing overall market capitalization. Since this also causes a proportional reduction in share price, it makes the stock more affordable for investors. It also indicates to the market that the price surged too high. Therefore, it's seen as a positive move.

Not surprisingly, Tesla (TSLA 5.30%) and Shopify (SHOP -1.69%) are among the top contenders in the list of stock-split stocks that have garnered maximum investor interest. However, there is one that is fundamentally stronger than the other and can prove to be a better buy in the current uncertain macroeconomic environment.

The case for Tesla

The year 2022 has been quite stressful for leading electric vehicle (EV) player Tesla. Besides macroeconomic pressures, the company has also been subject to significant supply chain bottlenecks, surging labor and raw material costs, and production challenges (e.g., factory shutdowns) in Shanghai.

Despite this, Tesla has managed to report impressive second-quarter (ending June 30, 2022) earnings performance with revenues jumping 41.6% year over year to $16.9 billion and adjusted earnings per share rising 56.6% year over year to $2.27. The company also delivered 254,695 cars in Q2, up 26.5% on a year-over-year basis.

Demand for Tesla's vehicles has remained mostly unaffected by the overall consumer slowdown. The company has been able to offset some of the cost impact associated with production challenges and rising inflation by increasing prices. However, these price benefits may soon erode, as many competitors such as General Motors, Ford, and Volkswagen are gearing up for the launch of several cheaper EV models in the next couple of years.

Tesla is working to halve the cost of Model Y batteries by opting for a cheaper and faster battery-manufacturing process called the dry-coat process. It is also working to increase the size of its battery cells. These cost-reduction tactics can help boost margins in the short run and also reduce the company's reliance on price hikes for profitability. Tesla is also exploring the possibility of entering battery-grade lithium refining in Texas to protect its business from the surging prices and supply challenges of lithium. If successful, these forward-thinking moves could be game changers for Tesla in the coming years.

The case for Shopify

After a solid run for over four years, leading online U.S. retailer Shopify seems to have hit a roadblock in 2022. Shares are down 80% so far this year, as investors remain concerned about the impact of surging inflation and rising geopolitical tensions on the company's growth prospects. Shopify also seems to have misjudged the pace of e-commerce growth following the pandemic, thereby resulting in the company making significant investments in workforce expansion. This has culminated in slowing top-line growth and mounting losses for Shopify.

However, all is not lost, considering that over 3.9 million merchants now use the Shopify platform. Besides small and medium businesses, the company is focusing on enterprise clients through its Shopify Plus service. The company is attracting new merchants who are keen on building an online presence in the increasingly digital world. Shopify also offers over 8,000 third-party applications through its app store, thereby enabling merchants to easily perform a broad range of tasks.

Shopify is creating a merchant-focused, end-to-end software and logistics platform to resolve supply chain and fulfillment challenges small and medium-sized businesses face. To that end, the company has acquired order-fulfillment specialist Deliverr and invested in freight-forwarding company Flexport.

Shopify carried cash of nearly $7 billion and total debt of $1.2 billion on its balance sheet at the end of Q2. While this does not include the impact of the $2.1 billion Deliverr acquisition, the company will still have a significant cash balance to continue its operations and growth initiatives.

Which stock should you buy now?

Although Shopify is a leading e-commerce infrastructure provider, investors should not ignore mounting expenses and intensifying competition. Approximately 5.9 million merchants across the world are selling products on their online platforms, a number that will continue to grow in the coming years

While Tesla also faces growing competition in the EV space, it has been working hard to remove most of its near-term pain points, including supply of raw materials and margin dependence on price hikes. Hence, Tesla is the superior investment of the two in the long run.