By Noel Randewich

(Reuters: Tesla (NASDAQ) announced Monday it will seek shareholder approval in order to increase its share count. This follows a series of recent megacap splits in an effort to draw more investors.

Tesla stated in filing that it will hold a vote during its annual shareholder meeting in an effort to increase the authorized share count in order to allow a stock splitting.

Tesla would approve a stock split. The announcement would be Tesla’s second since 2020.

Nvidia (NASDAQ) has split its shares in the last two years. Tesla, Apple, and Nvidia have also split their shares over these past 2 years. Amazon (NASDAQ) and Google’s parent Alphabet have announced future share splittings.

Megacap stock splits https://fingfx.thomsonreuters.com/gfx/mkt/xmpjoqrmgvr/Pasted%20image%201648486646427.png

To make their stock prices more attractive to investors, companies may decide to split shares. But, a stock split does not change its fundamentals.

BofA Global Research found that stock splits have historically been bullish for companies that implement them. The average return on shares is 25% and 9% respectively one year later.

Tesla stock spiked by 8% Monday adding more than $100 billion to its stock value.

Stock splits historically bullish https://graphics.reuters.com/AMAZON-STOCKS/SPLIT/xmpjoexdjvr/chart.png

Amazon gained 20% over the period March 9 to June 6, when the stock split was announced by the ecommerce giant. This compares with a gain of 7% in the Nasdaq over the same time period. Wall Street saw an even wider rebound of megacap growth stocks in the wake of losses earlier this year and volatility from rising interest rates as well as Russia’s invasion.

Fidelity’s online brokerage clients traded Tesla the most on Monday. Buy and sell orders were almost equally split. This suggests that retail investors are more cautious than usual about Tesla.

Megacap companies’ influence on the U.S. stock market – https://graphics.reuters.com/USA-STOCKS/MARKETCAPS/lgvdwqnzbpo/chart.png

Tesla joined the Index in December 2020 and has since been one of its top-weighted stocks. It currently makes up over 2%. Since August 2020, when it announced its first stock split, Tesla has seen a 300% increase.

Other S&P 500 companies with nominally high share prices, which analysts say could hint at a future stock split announcement, include Chipotle Mexican Grill (NYSE:), up 0.1% on Monday at $1,558, as well as Booking Holdings (NASDAQ:), trading near flat at about $2,247.

The S&P 500’s highest-priced stocks https://graphics.reuters.com/USA-STOCKS/HIGHPRICED/gdpzyjdokvw/chart.png