Tesla Stock Pops After Senate Passes Inflation Reduction Act and TSLA Board OKs Split
Late last week, Tesla’s (NASDAQ: TSLA) Board of Directors approved a three-for-one stock split, which is due to take effect on August 25th; stockholders of record as of August 17th will receive a dividend of two Tesla shares, and the price of all Tesla shares will be reduced by 2/3rds.
While a stock split is typically good for a stock’s performance, it has little to no bearing on a company’s actual operations. Not so with the other positive news piece: the Inflation Reduction Act passage. The wide-ranging bill has significant provisions that stand to benefit clean energy companies.
Most importantly for Tesla are the extension of the $7,500 tax credit for purchasing an electric vehicle (Tesla buyers were previously not eligible for the credit after the company reached their sales limit under the previous program) and the High-Efficiency Electric Home Rebate Program, which offers generous incentives for home improvements such as solar panels and batteries, both of which Tesla offers.
While the Inflation Reduction Act has only been passed by the Senate and still needs to pass the House of Representatives and then be signed by President Biden, the Democratic control of the House virtually guarantees its passage, while President Biden has already stated that he will sign.
An important caveat in the $7,500 EV rebate is that the final assembly of the vehicle must take place in the U.S. Tesla currently has factories in Fremont, California and Austin, Texas, with more factories expected in the near to medium term.
At the shareholder meeting where the stock split was approved, Tesla CEO Elon Musk stated that they intend to eventually reach a run rate of 20 million vehicles per year. With four factories currently in operation, Musk indicated that the company is looking to reach a dozen factories to meet its goals and that the next location could be announced by the end of the year.
Shares of Tesla closed trading today at $874.63 per share, up +1.17% on the day. YTD TSLA stock is down -27.10%.
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Disclaimer: Wealthy VC does not hold a position in any of the stocks mentioned in this article.