Tesla (TSLA) issues $5 billion capital raise as share prices hit all-time highs

For the third time this year, Tesla has announced plans to raise a bundle of cash through a common stock offering, taking advantage of record high stock prices.

In a regulatory filing with the Securities and Exchange Commission (SEC), the automaker says it plans to sell additional shares at market prices to raise as much as $5 billion. Shares peaked near all-time highs on Monday, closing at $641.76 per share.

While the filing states how much money will be raised, it doesn’t specify what the money will go towards. Instead Tesla says the money will be used to improve its balance sheet, that as of last count had nearly $15 billion in the bank already.

“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.”

Tesla’s other capital raises earlier this year, in February and September, raised $2 billion and $5 billion respectively.

The market response has been lukewarm on the news of the stock offering, dropping by 2% in morning trading.

TSLA shares Dec 8 2020

Legal Disclaimer – Mike holds shares of Tesla, Inc. (TSLA) and has no plans to change any positions within 72 hours.

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