Tesla to cash in on rally by sell­ing $5bn in shares

The Daily Telegraph - Business - - Technology Intelligen­ce - By Michael Cog­ley

TESLA is plan­ning to sell up to $5bn (£3.73bn) worth of shares as it at­tempts to make the most of its stock price’s re­mark­able rally.

The com­pany’s stock has climbed al­most 500pc this year, mak­ing founder Elon Musk the world’s third-rich­est per­son. The car­maker is now val­ued at around $455bn.

Tesla said it will sell shares “from time to time” through an agree­ment with sev­eral banks, ac­cord­ing to a reg­u­la­tory fil­ing. It plans to use the pro­ceeds to strengthen its bal­ance sheet and for gen­eral cor­po­rate pur­poses.

The plan is a form of “weaponisin­g” Tesla’s cheap cost of cap­i­tal, Ever­core ISI an­a­lysts Chris McNally and John Saager wrote in a re­search note.

Should Tesla press ahead with the full amount it will rep­re­sent the largest eq­uity raise ever for the com­pany.

It has raised about $14bn over the past decade through sec­ondary stock of­fer­ings, most re­cently in Fe­bru­ary.

As of last Septem­ber, $5bn would have rep­re­sented a sig­nif­i­cant por­tion of Tesla’s mar­ket cap­i­tal­i­sa­tion, which dipped just be­low $40bn at the time. To­day it is about 1pc of the $460bn mar­ket value, which ex­ceeds that of Toy­ota and Ford.

Tesla car­ried out a five to one share split last month, mean­ing share­hold­ers would get five shares for each one they held, thus di­lut­ing each one’s value. De­spite the split, in­vestor ap­petite has con­tin­ued with the price now stand­ing at $481 (£358), up 17pc in a week.

The run­away year for Tesla stock has been enough to push Musk above Face­book’s Mark Zucker­berg as the world’s third wealth­i­est man.

Musk’s wealth has more than tripled dur­ing pan­demic to $115bn, ac­cord­ing to the Bloomberg Bil­lion­aires In­dex. Musk is cur­rently paid through a longterm in­cen­tive plan that is linked to the com­pany’s rev­enue and val­u­a­tion.

The first tranche was made avail­able af­ter Tesla posted rev­enue of more than $20bn and held a val­u­a­tion of more than $100bn for a year.

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