Tesla shares are down after a blowout in July as the stock’s vote is divided

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Tesla

shares fell on Tuesday amid a wider decline in stock markets as a crucial shareholder meeting approached later in the week.

Shares in

Tesla

(ticker: TSLA ) were 0.7% lower in premarket trade, compared with futures tracking heavyweight tech stocks

Nasdaq

index, which fell 0.8%. Investor sentiment was hesitation amid rising geopolitical tensions between the US and China over Taiwan, which is a chip manufacturing hub critical to the global technology industry.

But the recent dip belies what has really been a blast month

Tesla

availability. The stock rose 32% in July, marking its best month since October 2021.

The stock market is likely to continue to focus on the economic outlook this week, with a number of closely watched jobs data releases — but Tesla has a whole other major catalyst. The company’s shareholders will meet on Thursday to vote on key measures, including the 3-for-1 stock split proposal.

Although a stock split does not make a company inherently more valuable, there are benefits. For starters, bulls believe the split signals to investors that management is bullish about the future. No company splits a stock it expects to fall. What’s more, stock splits make stocks more accessible to retail investors, a class of traders that has proven to be influential.

Retail investors matter to Tesla stock. Only about 54% of Tesla shares are held by institutions, according to Bloomberg. The comparable number for Alphabet (GOOGL) is about 85%.

Tesla split its stock 5 for 1 in August 2020. From the time the stock split was announced until it happened, the stock rose a whopping 81%. Investors probably can’t expect a repeat of that performance.

The move then boosted Tesla’s market capitalization from about $275 billion to $500 billion. Tesla’s market cap today is around $930 billion. An 80% move from today’s level would make Tesla more valuable than

Alphabet
.

Other matters before Tesla shareholders on Thursday include the re-election of board directors. Two proxy advisory firms are urging investors to vote against the re-election of two directors in particular and to vote on only six of eight shareholder proposals against the company’s wishes.

Write to Jack Denton at jack.denton@dowjones.com