Tesla will raise up to $5bn by selling stock as the electric carmaker capitalises on the six-fold surge in its share price this year.
The carmaker said in a filing on Tuesday that it will sell shares from “time to time” through an “at-the-market” offering programme, a transaction in which companies gradually sell new shares to investors on the open market.
Tesla shares have climbed to record highs in 2020, catapulting its market value beyond established carmakers such as Toyota and also overtaking some of America’s best-known companies including ExxonMobil and Walmart. The amount Tesla intends to raise through the stock sale represents just over 1 per cent of its market capitalisation.
Tesla needs more capital to invest in a fan-pleasing product pipeline that includes the “Cybertruck” pick-up model and a semi haulage truck.
The group is also busy expanding its international operations, with a new factory recently online in China, and plans for a European manufacturing and battery centre in Germany.
Chief executive Elon Musk has frequently used the company’s buoyant share price as a means of raising money more cheaply than through debt markets, particularly in years before the business began turning quarterly profits.
Interest in the stock, which also attracts a large number of vocal short-sellers betting against the company, is driven by several types of investor.
Some investors believe Tesla can crystallise its lead over established carmakers in software and electric technology to take a dominant position in the future of transport.
But there is also an army of enthusiastic retail shareholders who are often fans of Mr Musk and his business ventures, which stretch from space rockets to artificial intelligence.
The Palo Alto-based company announced a five-for-one stock split last month — the first since it went public. Tesla’s shares rallied 12.6 per cent on Monday and were up nearly 3 per cent in pre-market trade.
Tesla named Goldman Sachs, BofA Securities, Barclays Capital, Morgan Stanley and Citigroup Global Markets among its sales agents.