Tesla (TSLA) announced on Tuesday, in an SEC filing, that it will be issuing $5 Billion in an equity offering “from time to time” and “at-the-market” prices. The offering represents 0.85% of the firm’s market cap.
It is going to be the third share sale in 2020. Shares of Tesla have soared 635% YTD, and Tesla is leveraging the rally to raise vital capital.
The company said it expects to use the net proceeds to further strengthen its balance sheet, as well as for general corporate purposes. Tesla is operating in a capital-intensive industry, and it is currently in the process of building two factories. One in Texas, US, and Brandenberg, Germany.
Note that the 5-1 forward split and the S&P inclusions, which have contributed to the 6-fold rally of Tesla, do not change the fundamentals of the company. However, the company can lock in some of those gains by issuing equity at these levels.