By Nivedita Balu and Akash Sriram
(Reuters) - Tesla Inc will seek investor approval to increase its number of shares to enable a stock split in the form of a dividend, the electric-car maker said on Monday, sending its shares up about 5%.
The plan came as the company suspended its Shanghai factory amid COVID-19-related lockdown measures and its artificial intelligence head took a sabbatical as the company aims to achieve full self-driving capability this year.
The proposal, first announced on Twitter, has been approved by its board and shareholders will vote on it at an annual meeting. The stock split, if approved, would be the latest after a five-for-one split in August 2020 that made Tesla shares cheaper for its employees and investors.
Following a pandemic-induced rally in the technology shares, Alphabet Inc, Amazon.com Inc and Apple Inc, too, have in the recent past split their shares to make them more affordable.
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Tesla debuted at $17 per share in 2010. Following its 2020 5-for-1 stock split it is trading above $1,000, equivalent to over $5,000 on a pre-stock split basis.
Since the stock split in 2020, they have surged 128%, boosting the company's market capitalization above $1 trillion and making it the biggest U.S. automaker by that measure.
"This (stock split) could further fuel the bubble in Tesla's stock that has been brewing over the past two years," said David Trainer, chief executive of investment research firm New Constructs.
Tesla has delivered nearly a million electric cars annually, while ramping up production by setting up new factories in Austin and Berlin amid COVID-19-related disruptions and increasing competition.
Tesla on Monday notified its suppliers and workers that its Shanghai factory in China will be closed for four days as the financial hub said it would lock down in two stages to carry out mass COVID-19 testing.
Tesla Chief Executive Officer Elon Musk said on Monday that he had "supposedly" tested positive for COVID-19, a few days after he attended a car delivery event at the company's new Berlin factory.
"We think Berlin ramping, and both the MiniCar and India are on the horizon, we would agree with the timing," Roth Capital analyst Craig Irwin said, hinting that companies usually execute stock splits when good news is ahead.
Musk also said on Sunday Tesla's artificial intelligence chief Andrej Karpathy was on a fourth-month sabbatical, at a critical time that Musk wants to achieve full self-driving capability and roll out a humanoid robot prototype this year.
"Especially excited to get focused time to re-sharpen my technical edge and train some neural nets!" Karparthy tweeted.
"Though I already miss all the robots and GPU/Dojo clusters and looking forward to having them at my fingertips again," he said, referring to Tesla's AI chip Dojo.
Musk said in a podcast interview in January that Karpathy played an important role, adding: "People will give me too much credit and they’ll give Andrej too much credit.”
(Reporting by Nivedita Balu and Akash Sriram in Bengaluru and Hyunjoo Jin in San Francisco; Editing by Maju Samuel, Arun Koyyur and Bernadette Baum)