New Tesla electric vehicles at Tesla's vehicle factory in Fremont, California, the US, May 11 2020. Picture: REUTERS/STEPHEN LAM
New Tesla electric vehicles at Tesla's vehicle factory in Fremont, California, the US, May 11 2020. Picture: REUTERS/STEPHEN LAM

Oakland — Tesla is taking advantage of its surging shares by going back to the capital markets for the third time in 10 months and raising as much as $5bn of common stock.

The sale is through an “at-the-market” offering programme, according to a regulatory filing, meaning the stock will be sold over time at prevailing market prices. After soaring almost 670% in 2020, Tesla shares dipped as much as 4.2% before the start of regular trading Tuesday.

The raise could lead Tesla’s cash balance to approach $20bn, Joel Levington, a Bloomberg Intelligence credit analyst, said in a report. The company’s credit quality is now “well in excess” of its ratings even after three upgrades during the pandemic, he wrote.

CEO Elon Musk is again seizing on a rally that started as the maker of the Model 3 began to post quarterly profits in the second half of 2019. The opening of a plant near Shanghai, addition of the Model Y crossover to the line-up, advances in battery technology and anticipation of inclusion in the S&P 500 index has led investors to assign Tesla a much richer valuation than any other automotive manufacturer in the world.

It’s apparently led Musk to worry about employees taking their eye off the ball. He urged staff on December 1 to be mindful about spending and play a “game of pennies” even after Tesla reported its fifth consecutive quarter of profit in October. The carmaker had $14.5bn in cash and cash equivalents at the end of September.

The latest capital raise follows an issue of $5bn shares in September and a $2bn offering in February. Those have helped Tesla more than double planned spending on plants and equipment in 2020. The new money will support plans announced in October to double the carmaker’s capital-expenditures budget during the next two years to a range of $4.5bn to $6bn.

Tesla is building two new factories — one in Austin, Texas, and its first European plant, near Berlin — and expanding output at its existing vehicle-assembly facilities in Fremont, California, and Shanghai.

Bloomberg

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