Tesla will cash in on surging stock price with $5 billion stock sale
Tesla needs to expand rapidly to justify its soaring stock price. …
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Tesla will sell up to $5 billion in new shares, the company announced in a Tuesday filing with the Securities and Exchange Commission. The company didn’t give any specific timeline for completing the stock sale.
The announcement comes one day after Tesla completed a five-for-one stock split that sent Tesla’s stock soaring. When Tesla announced the split on August 11, Tesla’s stock was worth less than $1,400. Investors reacted enthusiastically, pushing the stock up 60 percent to over $2,200 over the following three weeks.
Since the split took effect on Monday, the stock has surged even higher and is now worth $480—$2,400 in pre-split terms.
The stock’s high price means that Tesla can raise a lot of cash by issuing a comparatively small number of shares. Tesla announced its last fundraising round of $2 billion in February when the stock was worth less than $800—$160 in post-split terms. With the stock now at roughly triple that value, Tesla will likely be able to raise $5 billion while giving up a smaller share of the company to new shareholders.
In previous years, Tesla was a cash-strapped upstart that needed to issue new shares to avoid running out of cash. But that’s no longer true. After February’s fundraising and four consecutive quarters of modest profits, Tesla has $8.6 billion in cash in the bank. The company could easily get by without this latest fundraising round. In its SEC filing, Tesla says that the cash will be used to
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