Monday's Headlines: Tesla Plans to Split its Stock
Here were the biggest movers in the MyWallSt shortlist on Friday:
Moving Up ⬆️
Vail Resorts (MTN) +1.3%
Facebook (FB) +0.5%
Lovesac (LOVE) +0.3%
Calavo Growers (CVGW) +0.1%
Brown-Forman (BF.B) -0.2%
Moving Down ⬇️
DocuSign (DOCU) -24.5%
Stitch Fix (SFIX) -18.5%
Roku Inc. (ROKU) -10.5%
StoneCo (STNE) -10.4%
Smartsheet (SMAR) -9.4%
Tesla Plans to Split its Stock 🚗
Electric vehicle (EV) manufacturer Tesla (TSLA) filed its annual proxy statement on Friday, revealing that the company is planning to seek shareholder approval to per from a 3-for-1 stock split.
The reasoning behind this proposed split is the belief that it will “reset the market price of our common stock so that our employees will have more flexibility in managing their equity,” according to the filing. It also went on to state that Tesla stock has seen significant interest from retail investors and that a split would make its shares “more accessible” to that particular group.
Of course, a stock split in no way changes the intrinsic value of a stock. This is largely a cosmetic change that has lost much of its relevance following the rise of fractional investing. However, similar announcements typically result in a notable boost in the share price of a company. In 2020, when Tesla last split its stock, its share price jumped by 13% the day following the announcement and embarked on an 81% run in the three weeks leading up to the day of the split.
This time, Tesla has seen no such flurry of investing, as its share price is actually down close to 3% in premarket trading. Tesla’s annual shareholder meeting will take place on August 4, with the stock split still subject to approval until then.
More Heartbreak for Illumina 💔
Shares in Illumina fell 10% on Friday after the company announced that its CFO Sam Samad is stepping down after five years. Samad will become the Executive Vice President and Chief Financial Officer of Quest Diagnostics.
Illumina is a DNA sequencing company that allows researchers to analyze genetic variation and biological function. It emerged in 1998 from a research project at Tufts University and has gone on to acquire a number of emerging competitors to expand its capabilities.
However, it hasn’t been a great year for the business. In May, the U.S. District Court of Delaware determined the company willfully infringed upon patents from competitor Complete Genomics. Appeals are expected, but if they were to fail, Illumina would be expected to pay royalties to Complete Genomics on a rolling basis. It has already been ordered to pay $334 million in damages.
Illumina is also currently fighting a legal battle with the Federal Trade Commission over an acquisition it made last year. In August 2021, Illumina finalized the purchase of GRAIL, a business it spun-off four years previously. GRAIL is a cancer research company and the creator of the Galleri blood test, which can detect 50 different cancers before they become symptomatic.
So far, Illumina’s shares are down 47% this year, reflecting the volatility that comes with emerging technology and medical research.
Coinbase Faces Mutiny 🌕
As if the plummeting crypto markets weren’t bad enough for Coinbase, it now seems as though management is struggling with a lot of internal discord too.
Last week, an internal employee petition calling for the removal of high-level execs in the company — including the COO and CPO — was leaked. The petition was circulated due to “plans and ideas that have led to questionable results and negative value”, including the failure of Coinbase as an NFT platform and the aggressive hiring for thousands of new roles, which management then had to row back on despite the fact that job offers had already been accepted by some candidates.
The now-deleted petition drew the ire of CEO Brian Armstrong, who tweeted on Friday that employees who don’t have confidence in company execs should “Quit and find a company to work at that you believe in!”
Widely considered the most straightforward and consumer-friendly exchange to buy and sell cryptocurrencies like Bitcoin and Ethereum, Coinbase has been on a wild ride since it IPO’d back in April 2021. The company primarily makes money by charging margin fees (also known as a “spread”) on trades performed through its platform, which often means that its fortunes are tied closely to the rise and fall of cryptocurrencies.
This morning, the value of Bitcoin plummeted to its lowest point since December 2020 amidst general bearishness surrounding inflation and the high-profile collapses of other crypto companies. This, combined with the internal battles being played out at Coinbase, points to a couple of rough days on the horizon for the company.