Tesla’s electric vehicles and energy products are obviously very popular among consumers. Its stock has proven to be popular with investors as well. On August 11, 2020, the company announced a five for one (5:1) stock split to make stock ownership more accessible to employees and investors. So, if you bought 1 share at a price of $2000 per share, you would own 5 shares at a cost basis for $400 per share after the split. Under either scenario your investment still totals $2000.
Let’s take a look at how the split and recent events affect Tesla’s stock float. A quick search on Floatchecker tells us the float is between 740 million and 745 million shares:
We’ll walk through the financial statements on file with the S.E.C. to calculate the stock float and compare that with the results from Floatchecker.
- Tesla Annual Report 10-K
- Stock Offering – February 2020
- Tesla’s 2020 Second Quarter Report 10-Q
- Proxy Statement – Schedule 14A
- 5:1 Stock Split
- $5 Billion Offering – September 2020
Tesla Annual Report 10-K/A
Tesla filed its 10-K on February 13, 2020 and then filed an amended 10-K on April 28, 2020. On the first page of both reports, the company provides an “aggregate market value of voting stock held by non-affiliates” of $31.54 billion based on the closing price of Tesla shares on June 30, 2019. That dollar amount is the float value.
To determine the number of shares in the float we can divide $31.54 billion by $223.45 (the closing price on June 28, 2019 since June 30 fell on Sunday which is a non-trading day). That gives us a stock float of 141,150,145 shares. As also noted in the 10-K, the company had 181,341,586 shares outstanding at the time of the filing. Keep in mind that the float is part of the outstanding shares. The remaining shares, in this case about 40.19 million, are likely subject to selling restrictions.
Stock Offering – February 2020
On February 14, 2020, Tesla filed a prospectus announcing it would offer for sale between 2,650,000 and 3,047,500 shares of common stock to raise money for general corporate purposes. We would expect that the number sold would impact both the total shares outstanding and the stock float, as we will examine in the 10-Q filing next.
Tesla’s 2020 Second Quarter Report 10-Q
On July 28, 2020, Tesla filed its 10-Q for the quarter ending June 30, 2020. The table on “Redeemable Noncontrolling Interests and Equity” reflects that, since the filing of the 10-K, 3 million shares of common stock were issued as part of the February 2020 offering and 2 million shares were issued as equity incentive awards.
Adding those 5 million shares to the number of shares outstanding give us a total of 186,341,586 shares (the table pictured above abbreviates that number to 186). We can add the 5 million shares to the float as well, which gives us 146,150,145 shares (141,150,145 + 5,000,000). This of course assumes that the 2 million shares from the equity incentive awards are not restricted.
The 10-Q also states that “Zero-Coupon Convertible Senior Notes” were converted into 223,320 shares of common stock:
A convertible note is short-term debt that converts into equity or stock. Assuming the shares aren’t restricted, we’ll add that amount to the float from above to get 146,373,465 shares.
Proxy Statement – Schedule 14A
The proxy is filed before the annual meeting to allow shareholders to vote on matters concerning corporate governance, including executive salary and compensation practices. Tesla filed a proxy on May 28, 2020 in advance of their annual meeting. An updated proxy statement was filed on August 13, 2020 after the annual meeting was moved from July to September and made part of the company’s Battery Day event.
Both proxies contain a table entitled “Ownership of Securities” detailing beneficial ownership by executives and directors. The May proxy identifies a total of 42,878,103 shares owned while the updated August proxy identifies 44,625,260 shares owned. The difference of 1,747,157 shares was due to new shares that were issued to officers and directors of the company such as the CEO Elon Musk and the CFO Zachary Kirkhorn, among others. Adding those new shares to the float gives us a total of 148,120,622 shares.
Finally, the August Schedule 14A proxy also includes a statement under its section on “Equity Compensation Plan Information” that 7,221,421 shares remain for issuance under Tesla’s 2019 Employee Stock Purchase Plan. That plan had set aside 7,500,000 for employees to purchase through payroll deductions. That means at least 278,579 shares were purchased by employees at the time of the proxy statement. Although such shares are typically kept in the employees’ retirement account, technically those shares could be sold after purchase so we’ll include them as part of the float calculation. Accordingly, our stock float totals 148,399,201 shares.
5:1 Stock Split
As noted, Tesla announced a five for one stock split in early August 2020. That means the outstanding shares, including the float, increased by 5 times. Multiplying 148,399,201 shares by 5 gives us an updated amount of 741,996,005 shares.
$5 Billion Offering – September 2020
On September 8, 2020, Tesla filed an 8-K report announcing that, on September 4, it completed the sale of $5.0 billion of its common stock through its “at-the-market” offering program which was previously disclosed on September 1, 2020. While we don’t know the prices at which the common stock was sold, the average of the closing price of the TSLA stock between September 1 and September 4 was $436.94. Dividing $5 billion by this average of $436.94/per share equals approximately 11,443,219 shares. Adding those shares to the post-split total yields a float of 753,439,224
Our pre-offering calculation resulted in a stock float for Tesla of 741,996,005 shares. Of course, there is the possibility that we either over-counted or under-counted certain restricted shares. But our analysis of Tesla’s S.E.C. filings appears to be in line with the result received from FloatChecker. Keep in mind that we also expect the float to increase closer to 750 million shares based on the $5 billion offering as discussed above. We’ll check back in with Tesla again at a future date to see how the float has changed.