Another investment push for Tesla; sells $5bn of shares – Wall Street Journal

Tesla stocks have a history of volatility. Investors with a high-risk appetite may not be put off by Elon Musk's eccentric personality – which has its own way of causing stock prices to dip and surge – and they should be quite happy right now. Since the car-making company announced a share split that made it more accessible to retail investors, Tesla's shares have risen about 80%. Now, it plans to sell as much as $5bn of shares, capitalising on its high-flying stock and its 5-for-1 stock split. – Claire Badenhorst.Tesla to sell up to $5 billion in stock.By Dave Sebastian.Tesla Inc. said it planned to raise up to $5bn through stock offerings from time to time as the electric-vehicle maker, which has enjoyed a surging share price, makes another investment push..___STEADY_PAYWALL___.The return to capital markets comes after the stock split 5-for-1 on Monday, sending it up sharply. The planned fundraising represents roughly 1.1% of Tesla's $464bn market capitalisation, according to FactSet.Tesla has enjoyed a strong run despite the pandemic that temporarily shut its lone US car plant in Fremont, California, as local authorities battled the spread of the Covid-19 disease. In July, the company posted a fourth-consecutive profitable quarter for the first time in its 17-year history, defying Wall Street analysts who expected a loss. But reaching that point hasn't been easy. In its quest to become the first mass producer of electric cars, Tesla burned cash to raise production and overcome logistical hurdles.The Silicon Valley car maker, which had about $8.5bn in debt at the end of the latest quarter, has at times struggled with a lack of liquidity, particularly during expansion periods when it introduced new models and added production capacity.The company in July said it was planning to open a second US car factory to be located in Austin, Texas, with production slated to start next year. It already is working on its first European car plant, outside Berlin, and has signed a loan agreement with Chinese banks to expand its car plant in Shanghai.Read also: How one investment fund hit the jackpot – thanks to TeslaTesla, which this year began delivering its Model Y sport-utility vehicle, also is working on several new vehicle types, including its Cybertruck pickup and Semi truck.David Whiston, an analyst for Morningstar Research, said there will likely be many more factories requiring heavy capital spending, and with the run-up in its stock Tesla can tap what almost amounts to free money.The shares have risen nearly sixfold this year, including a roughly 80% rise since the company's stock-split announcement on August 11th.Raising capital over time is a good way to involve retail investors, Craig Irwin, senior research analyst at Roth Capital Partners LLC, said. "They're going to sell $5bn of their stock into the open market from time to time for a much smaller fee than they would if they sold straight equity in a secondary [offering]."Millions of Americans are actively trading the markets during the Covid-19 pandemic. Individual investors have piled into pricey yet popular stocks like Tesla through fractional-share trading.The electric-vehicle maker in February raised more than $2bn from a stock sale to help bolster its balance sheet. Chief Executive Elon Musk, who is the largest owner of Tesla stock, has had a complicated relationship with fundraising. With a showman's flair, he has been successful in drumming up investor enthusiasm in Tesla, while also expressing a reluctance to issue stock over concerns it would dilute value for existing shareholders.Read also: Why Tesla, a once-popular short, powered up stock exchange – Wall Street JournalThe car maker's shares, which rose 13% on Monday, fell 4.7% to $475.05 on Tuesday after the company said it would issue more shares.Tesla said it has entered an equity distribution agreement with Goldman Sachs & Co., BofA Securities Inc., Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Morgan Stanley & Co., Credit Suisse Securities (USA), SG Americas Securities, Wells Fargo Securities and BNP Paribas Securities Corp.Those banks, which will act as sales agents, will get a commission of up to 0.5% of gross proceeds from each sale of Tesla shares, as well as reimbursement for certain expenses. The company said it could terminate the agreement at any time.Write to Dave Sebastian at dave.sebastian@wsj.com

Another investment push for Tesla; sells $5bn of shares – Wall Street Journal

Related Stories

Meet Tshepo Mahloele – Big Capitec shareholder, ABSIP’s “CEO of the Decade” now accused by Holomisa as kingpin of corrupt network

PREMIUM: Making of a great editor – the George Palmer playbook

Premium – BizNews global portfolio: ASML joins – so does Adobe as Bull takes hold again

Alec Hogg: Helen Zille predicts SA choice will be DA or EFF