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Tesla launches $5 billion capital raise, tapping in on share surge

Published 09/01/2020, 07:34 AM
Updated 09/01/2020, 10:00 AM
© Reuters. A Tesla SuperCharger station is seen in Los Angeles

© Reuters. A Tesla SuperCharger station is seen in Los Angeles

By Akanksha Rana and Tina Bellon

(Reuters) - Tesla Inc (O:TSLA) on Tuesday unveiled its biggest program of new share sales as a public company, seeking to cash in on soaring Wall Street interest in the electric carmaker to raise up to $5 billion that will ease future debt pressures.

The move comes a day after a 5-for-1 stock split took effect, Tesla's first since its initial public offering in June 2010, and follows a nearly six-fold increase in the value of its shares this year.

Tuesday's share sale comes as Tesla seeks to massively expand production of its existing vehicles and build new factories near Berlin, Germany and Austin, Texas. The company also plans to launch new lines of vehicles, including a semi-truck called the Tesla Semi and its futuristic Cybertruck.

Tesla said it plans to use proceeds from the offering to strengthen its balance sheet and for general corporate purposes.

Craig Irwin, a Roth Capital Partners analyst who has the equivalent of a 'hold' rating on the stock, on Tuesday said the capital raise did not come as a surprise.

"They will need cash for all the facilities they are building, and new growth initiatives," Irwin said.

Ten major banks, including Goldman Sachs (N:GS), Bank of America Securities (N:BAC), Citigroup Global Markets (N:C) and Morgan Stanley (N:MS), will conduct the sale, the electric carmaker said in a filing, giving no deadline for its completion. (https://

David Whiston, an analyst at Morningstar Research, said it remained to be seen how much money Tesla will ultimately raise. The company had $8.6 billion in cash and cash equivalents at the end of June.

"I can understand them taking advantage of the stock’s incredible run, but they don’t need the money right now," Whiston said.

Tesla in February had announced plans to raise $2 billion in a stock offering.

Tesla shares, which rose about 8% in early premarket trading, retreated to trade about 1% higher on the day after the news.

The company's high-flying stock has risen another 70% since the split was announced on Aug. 11, and was trading at over $2,000 before the division on Friday.

With a market capitalization now around $465 billion, it became the world's biggest car company by value in July and has propelled Chief Executive Officer Elon Musk's personal fortune past $100 billion.

Musk has repeatedly assured investors over the past year that Tesla would not need to raise more money for costly expansion initiatives or to pay down debt.

© Reuters. A Tesla SuperCharger station is seen in Los Angeles

Latest comments

lol I made thousands on Monday...Go Tesla!
That is true capitalism keep it up....
Shameful
Now turns greenIt's tesla stuff
2D
They created shares out of air n sold them for 5b. It couldnt get easier than that to create money. Fed must b jealous.
company was over rate 300%. It doesnt have money to run. Big balloon
typical scmbg musk. snake oil salesmen.
Only 18% of the electricity produced in the USA in 2019 was from renewable sources. This is what recharges car batteries. Is this great for the environment? What am I missing?
yes, you cant start at 100 you always need to start at step 1, once demand moves away from non renewables we will see change
Not great for the environment at all... mining is a major source of pollution and materials are becoming scarcer. Unlike some futurists I dont see how corporations can or will be able to fund space mining either given the “astronomical” cost. The world is at a crossroads in commodities/rare earths. I am complicit to the pollution as a metals investor and end user.
TIMMMBERRRRR. This is going to get soooo ugly.
Oh really? You think its a bad thing Tesla will be able to expand and build 4 more gigafactories years sooner than previously expected?
i’ve read your posts before. What did you just start trading yesterday. Watch the SP over the next couple of weeks. Then come back amd talk to me.
yeah for shorts they lost 12 billion to Tesla in the past year...bring it. They have been doubting Tesla for years only to get slayed.....Tesla destroying dreams for 10 years.
New CEO Jerry falwell JR is going to take the company in a more jesus friendly direction
He’s right guy to have in your corner /s
If anyones looking into the next tesla take a look at NIO, im seeing some pretty good results
The thing is Tesla has nominal production compared to market cap. Management probably thinks shares are expensive and they can use them to expand balance sheet and factories. Dilution might be just starting not the end.
see what happend after virgin galactic offering and act accordingly......
I’m neural, not short, not long but since Tesla has become such a talismin stock if you’re long the market, you’re long it, so in that way I am long.
The problem isnt Tesla but the whole market. Venture cap and management everywhere will flood equity till bull goes bear.
Nice. Money grab at the top of the market and the 'Hoodies will think this is a good thing. A financially sound company doesn't need 5 billion bucks.
A prophecy that fulfills itself. This is the end bears. No car company can raise so much money
Look up what this word means: dilution. Then think about what you wrote 😉
Can you say "PONZI"? This sham will burn down overnight and wipe out all the fools!!
Shares are up 1,000% for the year and they feel the need for additional dilution. I can’t wrap my head around this level of greed.
So what's next to make those 'genius' think it's good news and the share price will sure go up? A new model?
Ofcourse they do... it is way too over priced... they wan't to cash on now it is possible (that is... before the crash, that is inevitable). Expect same move from Apple soon... ...
U r wrong on Apple. They r buying their shares to jack up share price.
So what's next to make those 'genius' think it's good news and the share price will sure go up? A new model?
They need cash to R&D which make it even more overvalued. The question is how many shares will they sell for 5B? I doubt it’s the current price.
so raising money was one the reasons why they went up for stock split
of course.. what else can be a reason for them?
Most certainly, Elon can smell Bezos, so he needs more pesos.
Do they not have enough cash as is?
That's what I'm thinking
always better to get free cash while you can ... seems to be the normal today... you don't know what's going to happen tomorrow ... and people, investors are willing to pay no matter the price atm
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