Updated at 8:37 am EST
Tesla (TSLA) - Get Tesla Inc. Report shares jumped higher Monday after the clean-energy carmaker said it will ask shareholders to vote on a proposal that would enable the group to execute a stock split.
Tesla said it will seek approval to authorize additional shares, with plans to have a shareholder vote at the group's next annual general meeting on a stock split.
Tesla executed a five-for-1 stock split in the summer of 2020, when shares in the group were trading north of $2,000 each, as it prepared for inclusion in the S&P 500 benchmark later that same year.
Amazon (AMZN) - Get Amazon.com Inc. Report unveiled plans for a 20-for-1 stock split and a $10 billion share repurchase plan earlier this month, a decision that followed a similar move by Google parent Alphabet (GOOGL) - Get Alphabet Inc. Report earlier this year, likely to take place in July.
Tesla's desire to pursue a stock split doesn't change the fact that its stock is still trading at a valuation completely disconnected from fundamentals," said David Trainer, CEO of New Constructs, an investment research firm based in Nashville, who has advised his clients to sell into the stock's recent strength.
"A Tesla stock split would dramatically reduce the price of Tesla's stock, which would make it even more attractive to unsuspecting retail investors," he added. "This could further fuel the bubble in Tesla's stock that has been brewing over the past two years."
Tesla shares were marked 5.6% higher in pre-market trading Monday to indicate an opening bell price of $1,067.50 each.
The split news offset concerns over a shutdown at Tesla's gigafactory in Shanghai as authorities in China ordered a Covid-triggered lockdown in the country's biggest city.
Shanghai, a city with a population of more than 26 million, ordered a snap nine-day lockdown over the weekend amid China's broader struggle to contain the resurgence of coronavirus infections in the world's second-largest economy.
Tesla sold around 116,360 China-made cars over the first two months of the year, according to official trade data, most of which were bound for export to markets in Europe and Asia.
Founder and CEO Elon Musk also told his 77 million Twitter followers Sunday that he "supposedly" has Covid for a second time, but noted he has "almost no symptoms".