🔒 Alec Hogg: Tesla may be ringing market’s bell

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Tesla

Just weeks before the 1987 stock market crash, then small UK property business Capital & Counties conducted one of the largest rights issues London had ever seen. Its shrewd chairman, South African business icon Donald Gordon, saw an overheated stock market as a source of very cheap funding. His prescience set up Capco for decades of well capitalised growth.

Read also: Alec Hogg: Singapore a model for others

Another maverick entrepreneur, Tesla founder Elon Musk, is taking a leaf out of his late compatriot’s book. Yesterday Tesla disclosed in a regulatory filing to the US Securities and Exchange Commission it will be raising another $5bn. Ten of the world’s top banks, led by Goldman Sachs and Citigroup, will be selling these Tesla shares into the market to satisfy the seemingly endless investor demand.
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Three things stood out for me. First, it’s the third time in the past 10 months Musk has tapped the wallets of his supporters. Second, it takes Tesla’s cash pile to $20bn, securing the future no matter what the world next throws at us. And third, the banks are taking a commission of just 0.25% on the transaction – that’s a modest $12.5m, chump change for 10 of Wall Street’s finest suggesting they see little difficulty in placing the stock.

Read also: Alec Hogg: A way to stay sane in SA – stop cretins rent space in your head

Tesla’s shares dropped a few percentage points to $632 a share on the news. Considering it was below $100 only a few months ago, that’s barely a blip. Is Elon doing a Donny? Time will tell, but what’s already clear the boy from Pretoria appreciates that while hype is ethereal, cash in the bank is very real indeed.

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