Tesla Stock Dividend is just a stock split

2m read

·Nov 3, 2024

Tesla shares are trading higher today after they filed something signaling a stock dividend. But what is a stock dividend? Well, it's definitely not a dividend. A stock dividend is actually just a stock split with the word "dividend" mixed in to make it sound like if investors are getting something extra when they're actually getting nothing.

If you look at the form AK they filed, all they said is they're going to go through a process to enable a stock split of the company's common stocks in the form of a stock dividend. That's all it says; nothing else. The last time I heard the term stock dividend was when I was doing research for the book and looked into what Google did with respect to their shady stock dividend in 2014.

In a normal two-for-one stock split, what you'll see is one share of stock split into two identical shares at half the value. But that's not what happened with Google. So before 2014, Google only had one type of common stock, which were A shares with voting rights. So if it's split into two, investors should have ended up with two A shares.

But what actually happened was Google introduced C shares with no voting rights. So shareholders ended up with one A share with voting rights and one C share with no voting rights, both carved out of the 1 A share with voting rights. So overall, this was actually bad for Google shareholders.

But Google still had the audacity to call that stock split a stock dividend. You can learn more about the details of Google’s shady stock split in Chapter 6 of the book, which is available for free at this moment. We don't really know what Tesla intends to do with their stock dividend, aka split, but what I can guarantee you is they are definitely not going to pay their shareholders.

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Tesla Stock Dividend is just a stock split

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