Tesla has announced its plan to sell new shares, taking advantage of the company’s incredible rise and soaring interest from Wall Street, seeking to raise up to $5 billion.
The additional shares will be sold “from time to time” and “at-the-market” prices, with ten major banks to conduct the sale, according to Tesla’s filing with the Securities and Exchange Commission.
“We intend to use the net proceeds, if any, from this offering to further strengthen our balance sheet, as well as for general corporate purposes,” Tesla said.
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Tesla’s announcement comes just one day after its 5-for-1 stock split took effect. The carmaker’s market cap is currently standing at around $464 billion, making them the world’s biggest car company. This also means that the new offering represents around 1 percent of the company’s value.
Tesla’s share prices have gained 70 percent since the split was originally announced on August 11. As reported by CNBC, “Through Monday’s close, the electric car maker has gained nearly 500% in 2020. In the last year, shares have gained 1,004% compared with the S&P 500′s 20% rise.”
Musk has repeatedly assured investors last year that Tesla would not need to raise more money. Despite this, the company had already announced its plan to raise $2 billion in a stock offering back in February.
Speaking to Reuters, Wedbush analyst Dan Ives called Tesla’s decision for a new capital raise a smart move at the right time for the company.
“Now in a clear position of strength and out of the red ink, Musk and his red cape are raising enough capital to get the balance sheet and capital structure to further firm up its growing cash position and slowly get out of its debt situation,” Ives said.
