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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Tesla, Inc.    TSLA

TESLA, INC.

(TSLA)
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Tesla to Sell Up to $5 Billion in Stock -- 2nd Update

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09/01/2020 | 03:25pm EDT

By Dave Sebastian

Tesla Inc. said it planned to raise up to $5 billion through stock offerings from time to time as the electric-vehicle maker, which has enjoyed a surging share price, makes another investment push.

The return to capital markets comes after the stock split 5-for-1 on Monday, sending it up 13% to $498.32. The planned fundraising represents roughly 1.1% of Tesla's $464 billion market capitalization, according to FactSet.

Tesla has enjoyed a strong run despite the pandemic that temporarily shut its lone U.S. car plant in Fremont, Calif., 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, it burned cash to raise production and overcome logistical hurdles.

Tesla, which had about $8.5 billion 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 Silicon Valley car maker in July said it was planning to open a second U.S. car factory to be located in Austin, Texas, with production slated to start next year. The company 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.

Tesla, which this year began delivering its Model Y sport-utility vehicle, also is working on several new vehicle types, including its Cypertruck 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 Aug. 11.

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 $5 billion 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 $2 billion 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.

The car maker's shares fell about 2.8% to $484 in afternoon trading after the company said it would issue more shares.

The company on Tuesday 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

 


Stocks mentioned in the article
ChangeLast1st jan.
BARCLAYS PLC 2.52% 106.42 End-of-day quote.-42.22%
BNP PARIBAS -0.74% 29.53 End-of-day quote.-43.69%
CITIGROUP INC. 1.82% 41.88 End-of-day quote.-48.52%
CREDIT SUISSE GROUP AG -3.89% 8.754 End-of-day quote.-30.50%
DEUTSCHE BANK AG 2.59% 7.96 End-of-day quote.12.17%
MORGAN STANLEY 1.34% 47.855 End-of-day quote.-6.94%
MORNINGSTAR, INC. 9.35% 195.4898 End-of-day quote.18.15%
TESLA, INC. 1.13% 410.6 End-of-day quote.385.29%
THE GOLDMAN SACHS GROUP, INC. 0.13% 190.01 End-of-day quote.-17.47%
WELLS FARGO & COMPANY 0.42% 21.27 End-of-day quote.-60.63%
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Financials (USD)
Sales 2020 30 724 M - -
Net income 2020 1 241 M - -
Net cash 2020 1 780 M - -
P/E ratio 2020 328x
Yield 2020 -
Capitalization 385 B 385 B -
EV / Sales 2020 12,5x
EV / Sales 2021 8,65x
Nbr of Employees 48 016
Free-Float 79,9%
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Technical analysis trends TESLA, INC.
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 38
Average target price 368,84 $
Last Close Price 406,02 $
Spread / Highest target 42,4%
Spread / Average Target -9,16%
Spread / Lowest Target -80,3%
EPS Revisions
Managers
NameTitle
Elon Reeve Musk Chief Executive Officer & Director
Robyn M. Denholm Chairman
Zachary Kirkhorn Chief Financial Officer
Kimbal Musk Director
Ira M. Ehrenpreis Independent Director
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