We woke up to some very interesting news this morning… and it’s all about Tesla (TSLA) again. 

That’s right, our beloved (or “behated”, depending on who you ask) EV maker is back to making headlines and it’s over a stock split… Another one!

Here’s what Tesla slipped in a Form 8-K filed early this morning:

“On March 28, 2022, Tesla, Inc. (the “Company” or “Tesla”) announced its plan to request stockholder approval at the upcoming 2022 Annual Meeting of Stockholders (the “Annual Meeting”) for an increase in the number of authorized shares of common stock through an amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Amendment”) in order to enable a stock split of the Company’s common stock in the form of a stock dividend. Tesla’s Board of Directors (“Board”) has approved the management proposal, but the stock dividend will be contingent on final Board approval.”

In short, the company disclosed that it’s planning to seek approval for another (a second one) stock split. 

The market is clearly enjoying the news – TSLA shares are gaining over 6% as of midday, holding steadily above $1000 for the first time in over 2 months. 

But will the hype be enough to keep the stock going? And what can we expect next?

Split-Frenzy

When it comes to splits, TSLA has been keeping good company. 

The famed automaker is set to join the likes of Nvidia (NVDA), Apple (AAPL), Alphabet (GOOGL), and Amazon (AMZN), all of which have done or announced splits fairly recently.

And I can’t blame these guys – the performance of many recent splitters suggests it’s a wise thing to do.

AMZN has gained over 10% since the announcement and for the first time in over a year manages to hold a short-term uptrend. 

NVDA, another one of the recent splitters, is up nearly 50% since the split. 

AAPL and GOOGL are also in the “green”. 

Money has obviously been flooding into “hot” stocks, once they become more affordable post-split. 

And I didn’t even mention the greatest post-split performer out there… you guessed it, that would be TSLA itself!

Tesla shares have gained nearly 130% since its original split in late 2020. 

Will history repeat itself this time around?

TSLA 2022 vs TSLA 2020

As much as we all wish for TSLA to give us another year of fun, the reality is a bit more complex. 

There are two major differences between TSLA in late 2020 and TSLA right now, in 2022. 

These are: 

1. The Market

In later 2020, right as TSLA’s split was announced we were at the start of one of the

greatest bull cycles in the market’s history – the SPY itself has gained nearly 50% since.

Of course, we may be at the start of another one right now, but let’s keep it real – there’s a good amount of healthy arguments over market overheating and the recent price action is proof. 

The market needs to at least hold-up – otherwise, it will be a major drag on TSLA.

2. Short Interest

Another, and perhaps bigger issue is short interest. 

See, a huge deal of TSLA’s ascent of the past few years has been the results of a short squeeze. The name is as hated by shorts, as it is loved by the bulls.

Short interest has always been elevated, and it gave the stock a boost each time it pressed higher.

But NOT NOW! Right now, less than 3% of TSLA’s float is short – that’s not a lot in either absolute or relative to TSLA terms. 

Based on the above, I think we should be careful with blindly jumping on the TSLA bandwagon again. 

I’m not saying the stock can’t double from here – if there’s one name out there that can gain insane momentum in a matter of days, it is surely TSLA.

BUT, I do want everyone to keep in mind that many forces that took Tesla where it is today, are simply not there anymore. 

For a long trade, I really want to see strong confirmation of momentum and support. 

Following today’s strength, I don’t want the stock to look back. 

I’ll consider a long trade back to the highs only if it holds steadily above $1020 over the next few days. 

If TSLA starts acting shaky – that’s a stay away for me.