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