After plans to sell $5 billion (USD) in shares a few months ago, Tesla’s (TSLA) stock price has continued to shoot through the roof, even after the sale. And now, the company plans to make another big sale of its shares.
On Tuesday, Tesla announced plans to raise $5 billion for the second time this fall, as reported by CNBC. These shares will be sold at market prices on an occasional basis, according to a filing with the Securities and Exchange Commission.
Since Tesla’s market capitalization at $598 billion, the company’s newly-for-sale shares will only be worth less than 1% of the company’s value.
Tesla in a $5 billion capital raise on Tuesday,second such move in 3 months as the electric-car maker cashes in on a meteoric rally in its shares this year.
The company’s shares touched a record high on Monday, pushing Tesla’s market capitalization above $600 billion— Ajay Bagga (@Ajay_Bagga) December 8, 2020
With Gigafactories Texas and Berlin both under construction and set for completion next year, the move will free up a large amount of capital for Tesla during this phase of global expansion. In 2021 and 2022 alone, Tesla plans to spend $2.5 billion on its new factories and battery cell manufacturing efforts.
Tesla’s inclusion on the S&P 500 helped Tesla’s stock continue to rally this month, up 57.3% from when the announcement was made. Wedbush analyst Daniel Ives remarked that the move to another $5 billion in capital “further solidified” a bull case for Tesla.
Ives said, “Now in a clear position of strength and out of the red ink with major factory build outs on the horizon (Austin and Berlin), 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, which throws the lingering bear thesis for Tesla out the window for now.”
With the world on the cusp of climate catastrophe, electric vehicles couldn’t come soon enough. And if Tesla’s stocks are any indication, it seems the world is finally embracing them.
