In an effort to beef up the firm’s balance sheet and capitalize on massive stock gains this year, electric-carmaker Tesla said on Tuesday it will raise up to $5 billion in a new stock offering, the second time since September that the firm’s raised cash by issuing new shares.
In a Tuesday regulatory filing, Tesla said it could issue up to 7.8 million new shares based on Monday’s closing stock price, increasing the number of shares outstanding to roughly 955.6 million.
The firm said it plans to use offering proceeds to “further strengthen” its balance sheet by investing in high-grade bonds, cash equivalents or U.S. government securities.
Tesla shares are down 1% on Tuesday following the announcement, but still up an eye-popping 660% this year alone; meanwhile, the tech-heavy Nasdaq has climbed 37%.
The firm previously announced another $5 billion capital raise on September 1 after year-to-date stock gains of roughly 450%.
“Now in a clear position of strength and out of the red ink with major factory build-outs on the horizon (in Austin and Berlin), Tesla is 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,” Wedbush analysts Daniel Ives and Strecker Backe wrote on Tuesday.
Founded in 2003, Tesla went public on the Nasdaq exchange in June 2010 at an offering price of $17 per share. Shares have rallied this year amid a broader market boom for high-flying tech stocks, and much of the surge has happened in just the past month after S&P Global announced in mid-November that it will add Tesla to the S&P 500 Index on December 21, a move that should drive up demand for Tesla shares given the number of index and mutual funds tracking the S&P.
$600 billion. That’s how much Tesla topped in market value on Monday, making it nearly three times more valuable than the world’s second-most valuable automaker, Toyota. This year’s stock surge has boosted Musk’s net worth to roughly $141 billion, Forbes estimates.
What We Don’t Know
S&P Global hasn’t yet announced which firm Tesla will replace on the S&P 500.
Elon Musk’s Fortune Surges $6 Billion After S&P 500 Makes Tesla Its Largest-Ever Addition (Forbes)