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Tesla will cash in on surging stock price with $5 billion stock sale:
Tesla will sell up to $5 billion in new shares, the company announced in a Tuesday filing with the Securities and Exchange Commission. The company didn't give any specific timeline for completing the stock sale.
The announcement comes one day after Tesla completed a five-for-one stock split that sent Tesla's stock soaring. When Tesla announced the split on August 11, Tesla's stock was worth less than $1,400. Investors reacted enthusiastically, pushing the stock up 60 percent to over $2,200 over the following three weeks.
Since the split took effect on Monday, the stock has surged even higher and is now worth $480—$2,400 in pre-split terms.
The stock's high price means that Tesla can raise a lot of cash by issuing a comparatively small number of shares. Tesla announced its last fundraising round of $2 billion in February when the stock was worth less than $800—$160 in post-split terms. With the stock now at roughly triple that value, Tesla will likely be able to raise $5 billion while giving up a smaller share of the company to new shareholders.
(Score: 4, Informative) by Anonymous Coward on Wednesday September 02 2020, @09:55AM (6 children)
When the stock is overvalued like that, this is a common-sense thing that they can do. They need cash and what is cheaper than free money? Like literally, it's people throwing money at TSLA.
This is incorrect statement. TSLA is not "giving up" anything - it's diluting its current shareholders' shares. Current shareholders are "giving up", not TSLA. For example, if you have 1000 shares of Company A and the company has 1000000 shares total worth $1,000,000 then you have approximately $1000 worth of the company representing 0.1% of the company. If the company then sells 1000000 more shares and gets $500,000 for those shares, then your portion of the company is now 0.05% (or half of what it used to be). If the company valuation increases by the cash infusion, then you now have $750 worth of the company (0.05%).
In all cases, this is free money for the company. It's essentially recapitalizing the company and if people are willing to throw money at TSLA for irrational reasons, this is a good move as it doesn't cost the company anything unlike traditional loans. Traditional CEOs don't like to do this because all they care about is their stock options and dilution tends to lower the stock price.
(Score: 0) by Anonymous Coward on Wednesday September 02 2020, @12:38PM (3 children)
Honestly, they deserve it. I'm not sure why anybody would invest in that particular company. It's a miracle that they haven't already gone out of business due to their cars murdering people and the incompetence with which they've gone about building their factory.
(Score: 2) by JoeMerchant on Wednesday September 02 2020, @01:25PM (2 children)
It's not a miracle, just lucky timing. Has the U.S. ever had a more "business friendly" climate than the last 4 years?
🌻🌻 [google.com]
(Score: 0) by Anonymous Coward on Wednesday September 02 2020, @02:12PM (1 child)
Yes, I would say under St. Ronnie. He didn't have to deal with state governors throwing the economies of their states into ruin to boost Mondale's chances.
(Score: 0) by Anonymous Coward on Thursday September 03 2020, @01:00AM
Yes, Reagan the Butcher did rape the American working class to give money to the rich parasite class with his signature voodoo economics. Amazing he found the time to destroy the American working class with his busy schedule of arming and financing right-wing death squads and illegal wars in Central America financed through selling crack cocaine domestically and laundered via Iran... because congress would not approve Reagan's illegal wars. And, something always missing from the far-right revisionist histories of this monster who liked to quote Hitler-- He financed a genocide of many hundreds of thousands of indigenous people in Guatemala (even the man who led the genocide on the ground stated that Reagan was at least as responsible as he was).
One of that asshole's unsuccessful attempts to further impoverish poor Americans was an attempt to lower the minimum wage from $3.35/hr to $2.25/hr since the rich parasite ownership class was having such a hard time struggling to get by.
Fuck Reagan. Definitely one of our presidents who would have been dangling by the neck from a rope if we were a nation of laws. A mass murderer.
(Score: 2) by DeathMonkey on Wednesday September 02 2020, @04:54PM (1 child)
Don't let simple math stand in the way of your Tesla hate!
If there are 100 shares and I own 1 of them I own 1% of Tesla.
If you split each share into 5 shares there are now 500 shares and I own 5. That is still 1% of Tesla.
(Score: 0) by Anonymous Coward on Wednesday September 02 2020, @06:00PM
That's a split, like happened in February. This is sale of NEW stock, so you go from 1 of 100 to 1 of 200, or from 1% to 0.5%.