Tesla plans to raise as much as $ 5 billion by selling shares, as the American electric car pioneer profits from a rally that will propel him into the S&P 500 this month.
The company said in a deposit Tuesday that he would occasionally sell new shares in the open market, which would give him more pricing flexibility than if he held a formal secondary stock offering.
The announcement comes just weeks before Tesla enters the S&P 500, a move that should fuel further demand for the stock as passive investors who follow the US benchmark are forced to buy.
Tesla hired 10 banks, including Goldman Sachs, Citigroup and Barclays, to help it sell the shares.
Despite a six-fold increase in its shares that propelled its market cap to over $ 500 billion this year, Tesla only became eligible for inclusion in the S&P 500 after posting a fourth consecutive quarter of profits in the during the summer.
Long pursued by problems in achieving its delivery targets, an improvement in its underlying performance in 2020 has established its credentials with investors.
However, the challenges Tesla faces are multiplying. Despite a lead in battery-powered car technology, Tesla faces renewed competition from historical players such as Volkswagen, which has pledged to spend € 35 billion to achieve its ambitions in electric vehicles.
VW, the world’s largest automaker by volume, aims to achieve 20% of global electric car sales by 2025 and produce 26 million fully electric vehicles by the end of the decade.
In contrast, Tesla has planned to set a record by producing more than 500,000 cars this year – but still a fraction of the 10 million units produced each year by VW and Toyota. The US company, which posted its fifth consecutive quarterly profit in October, is building a plant in Germany and ramping up production at its newly opened Chinese plant.
In July, the group overtook Toyota, the world’s most valuable automaker, when its market value exceeded $ 200 billion. Since then, Tesla’s value has more than doubled.
The astonishing rally has also raised concerns about the group’s valuation, with skeptics pointing out that its profits have been aided by the sale of regulatory credits – in which the carmarker sells zero-emission credits to rivals in need.
Elon Musk, founder and CEO of Tesla, has previously used selling stocks – and the bond market – as a means of raising funds. In September, Tesla announced a similar stock sale.
Mr. Musk also introduced a stock split in late August, the first in its history, to make it easier for small investors to buy the company.