Tesla (TSLA) announced today a $5 billion capital raise to take advantage of the stock price’s meteoric rise.
While Tesla CEO Elon Musk previously said that the company wasn’t interested in a new capital raise as it believed it was capable to finance its ambitious growth through its operations, it looks like they couldn’t resist following the stock price increase.
Tesla’s stock price has rose 500% in 2020 and the stock is now trading at close to $470 billion.
To take advantage of the situation, Tesla announced today a $5 billion capital raise:
“On September 1, 2020, Tesla, Inc. (“Tesla”) entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Goldman Sachs & Co. LLC, BofA Securities, Inc., Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, SG Americas Securities, LLC, Wells Fargo Securities, LLC and BNP Paribas Securities Corp., as sales agents (each, a “Sales Agent” and collectively, the “Sales Agents”), to sell shares of common stock, par value $0.001 per share, of Tesla (the “Common Stock”) having aggregate sales proceeds of up to $5.0 billion (the “Shares”), from time to time, through an “at-the-market” offering program (the “Offering”).”
It’s Tesla’s second capital raise in 2020. The automaker raised $2 billion back in February.
Like with the last capital raise, Tesla doesn’t specify any use of the proceed other than “strengthening the balance sheet”:
“We currently intend to use the net proceeds from this offering to further strengthen our balance sheet, as well as for general corporate purposes. Pending use of the proceeds as described above, we intend to invest the proceeds in highly liquid cash equivalents or United States government securities.”
As of the end of last quarter, Tesla had record cash and cash equivalents of $8.6 billion.
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