Will Tesla Stock Split in 2024 After TSLA Bounces Back?

Will Tesla Stock Split in 2024?
No, Tesla CEO Elon Musk and his Board of Directors have not announced any plans for a Tesla stock split in 2024.

But the maverick CEO of SpaceX and Starlink could send a tweet anytime, keeping Tesla stock split rumors alive, so it is worth keeping abreast of the situation.

Why Doesn’t Tesla Split Its Stock?
TSLA Stock Price
Tesla (TSLA) stock is well down from all-time highs; thus, the impetus to make shares more affordable is not quite there.

If Tesla’s current stock price isn’t viewed as prohibitively high, there might not be a strong need for a split. In other words, Tesla may believe the price is already within reach for most investors.

That’s not to say a Tesla stock split date could never be announced at these prices. Historically, management has tried to bump shares out of a slump by conducting stock splits.

Management at Tesla may feel that its current stock price accurately reflects its market value, and therefore doesn’t see the necessity of a split.

A higher stock price can convey stability to investors, and Tesla may want to preserve that perception.

Earnings
Tesla’s 2023 annual earnings paint a mixed picture.

While revenues increased by 24% year-over-year from 2022 to 2023, reaching $81.5 billion in 2023, its net profit declined.
In 2022, Tesla had a net profit of around $12.6 billion, but in 2023, that figure dropped to approximately $10.5 billion, reflecting a 17% year-over-year decrease in profits.
This drop in profitability comes from price cuts on its vehicles to stay competitive, squeezing margins. With profits down and costs rising, Tesla’s current financial position might not justify another stock split, which usually signals strong confidence in future growth.

Elon Musk’s Distractions
It seems fair to assume that a Tesla stock split couldn’t happen without CEO Elon Musk’s approval. However, Musk appears to be preoccupied with his other ventures, from Starlink to X Corp (formerly Twitter) to SpaceX and Neuralink.

To his credit, he appears to be juggling all his ventures with sufficient verve – but a Tesla stock split is probably far down the pecking order of Elon Musk’s priorities.

More broadly, if Tesla’s top team doesn’t see any major strategic benefits from a split at this time, it might choose not to proceed with one. Without a clear advantage, they could prefer to maintain the current structure rather than change it unnecessarily.

EV Market Outlook
While the trend towards electrifying vehicles still looks to be intact, the industry is not without uncertainties. For one, the value of used Teslas has been falling, pointing to potentially falling demand as well as government discount schemes to buy new EVs, which distorts the incentives behind market pricing.

Tesla’s previous stranglehold over the EV market has also been waning as the major car manufacturers catch up. There is high demand for hybrids, and new low-cost EV competitors, mostly from China, are bringing down the average price.

What Does This Mean for Investors?
Long-term Tesla shareholders will have preserved the memory of TSLA shares north of $400 and would likely want to see a return to those levels, something a stock split closer to $200 would delay.

Tesla could theoretically do a 2-for-1 stock split at ~$200, bringing the shares back to $100 – a nice round number and affordable to most potential investors. That would mean that the adjusted Tesla record high would not be $409.97 but rather $204.99.

The possible downside of such a move would be psychological. Long-term shareholders, while understanding that the all-time high price has adjusted post-split, might still want to see the shares rise over $400—and over the pre-split record high.