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Tesla (TSLA) announces $5 billion capital raise at insane stock price

Tesla (TSLA) is announcing today a new $5 billion capital raise as the automaker simply couldn’t resist raising money at low dilution, thanks to its insane stock price.

In 2020, Tesla has already done two capital raises; $2 billion in February and $5 billion in September.

That’s after CEO Elon Musk said that Tesla wouldn’t raise money again, but the automaker couldn’t resist after its stock price surged, allowing it to raise money at a lower dilution for current investors.

But now Tesla’s stock has surged again following the announcement of its inclusion in the S&P 500 and the automaker is going back to the well.

Today, Tesla is announcing a new up to $5 billion “at-the-market” capital raise:

We have entered into an equity distribution agreement, or the equity distribution agreement, with Goldman Sachs & Co. LLC, Citigroup Global Markets Inc., Barclays Capital Inc., BNP Paribas Securities Corp., BofA Securities, Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, SG Americas Securities, LLC and Wells Fargo Securities, LLC, as our sales agents, under which we may offer and sell from time to time our common stock having an aggregate offering price of up to $5,000,000,000. The sales agents may act as agents on our behalf or purchase shares of our common stock as principal.

Like the previous two capital raises this year and unlike the ones before that, Tesla is again not associating the capital raise to finance any specific project.

Instead, Tesla again says that it will simply improve its balance sheet with the money:

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 high-grade investments, highly liquid cash equivalents or United States government securities, subject to applicable regulatory restrictions.

At the end of the last quarter, Tesla had a record amount of cash and cash equivalent on its balance sheet: $14.5 billion.

Here’s the full prospectus for Tesla’s new capital raise:

[scribd id=487345881 key=key-ckiGlaSp1AsQyAjZqCnx mode=scroll]

Electrek’s Take

Last week, we reported on the likely possibility of Tesla raising money again after the crazy surge that the stock price has been on lately.

However, we hoped that it would be linked to an increase in capital expenditure to accelerate Tesla’s plans related to its mission to accelerate the advent of electric transport and renewable energy.

We discussed many things that they could do with the money that they could raise on the podcast last week:

Instead, Tesla decided to “strengthen the balance sheet” and says that it will sit on that cash in its “cash equivalents” line on its balance sheet.

That’s kind of disappointing to me as a shareholder.

I doubt that the market will care much with the kind of buying pressure Tesla’s stock has been under lately, it should gobble up $5 billion worth of share pretty easy — especially with the S&P inclusion coming.

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