Tesla climbs 7% on plan to seek shareholder approval to split its stock

• Tesla said Monday it will ask shareholders for their approval to split its stock.
• The EV company wants to issue additional shares so that it may pay a dividend using stock.

Tesla shares on Monday jumped to their highest price in more than two months after the electric vehicle maker said it wants to pay a dividend in the form of additional stock by splitting its shares — echoing the stock split it executed in 2020.

In a Monday filing with the Securities and Exchange Commission, Tesla said it's planning to ask shareholders for approval to increase the number of its authorized shares. It's taking that action "in order to enable a stock split of the Company's common stock in the form of a stock dividend," according to the filing, which didn't specify the size of the potential split.

Shares surged as much as 6.8% to $1,079.77 as regular-session trading got underway, reaching their highest price since January 13 when they were valued at more than $1,100 each. The stock later pared its gain to 5.5%.

Tesla, whose market capitalization sat at more than $1 trillion, will ask for approval of the stock split at its upcoming 2022 meeting with shareholders that has yet to be scheduled.

"[Given] the stock's meteoric run it's not a surprise that Musk & Co. are heading down the path of another stock split, especially with robust EV demand and the build-outs of the flagship Berlin and Austin Giga factories now on a glide path," Wedbush analyst Dan Ives said in a note early Monday referencing Tesla CEO Elon Musk.

"We view Tesla's move following the likes of Amazon, Google, Apple and initiating its second stock split in two years as a smart strategic move that will be a positive catalyst for shares going forward," said Ives.

Tesla in August 2020 enacted a 5-to-1 stock split to pay stockholders a dividend using shares instead of cash. Shareholders received an additional four shares, and Tesla said the move made stock ownership "more accessible to employees and investors."

Ahead of the 2020 split, Tesla shares traded at around $2,213. They closed trading at $498.32 after the first post-split session on August 31, 2020.

So far in 2022, shares had declined about 4% through Friday's session, in part on a wider rout of technology stocks in the face of rising interest rates.