Tesla to sell as much as US$5b of shares after stock surge

[SAN CARLOS] Tesla plans to sell as much as US$5 billion of shares, capitalising on its high-flying price and on a recent stock split that made it more accessible to individual investors.

The Palo Alto, California-based carmaker will sell the shares "from time to time" through an agreement with several banks, according to a regulatory filing. It plans to use the proceeds to strengthen its balance sheet and for general corporate purposes.

The new programme could be the largest equity raise ever for Elon Musk's company if it sells at least US$2.34 billion under the plan. Until now, Tesla had raised about US$14 billion over the past decade through secondary stock offerings, most recently in February. The sales have helped bolster the company's cash during its transition from a niche electric carmaker to the mass market.

Tesla shares were little changed in early trading, following earlier gains after the share sale was disclosed. The stock has climbed almost 500 per cent this year on a split-adjusted basis.

The move is a form of "weaponizing" Tesla's cheap cost of capital, Evercore ISI analysts Chris McNally and John Saager wrote in a research note published Tuesday.

As of last September, US$5 billion would have represented a significant portion of Tesla's market capitalization, which dipped just below US$40 billion at the time. Today it is about 1 per cent of the US$460 billion market value, which exceeds that of Toyota Motor and Ford Motor combined.

BLOOMBERG