“r.itemList.length” “this.config.text.ariaShown”
“This.config.text.ariaFermé”
Tesla’s shares (NASDAQ: TSLA) are trading downwards today, 3.5% to 1 p.m.EDT, after the electric vehicle manufacturer said it planned to reach $5 billion by issuing new shares.
In a series of regulatory filings Tuesday morning, Tesla said it had entered into agreements with several investment banks to sell up to $5 billion in stock.This is an “on-the-market” offer, which means the shares will sell over time.at the prices in force in the market, than in a lot of singles at a constant price.
Image source: The Motley Fool.
Surprisingly, Tesla doesn’t seem to have a primary cash plan right now.The company has just stated that it would use the supply proceeds for its balance sheet and “for general corporate purposes”.every word that normally means, “We don’t have a close-up of cash right now”).
Tesla has major projects underway, adding a plant under structure in Germany and a plan to build another in Texas, and is never over on the balance sheet, especially in times of economic uncertainty (this may really be the company’s purpose here.)
But it doesn’t seem to have an urgent need for liquidity: as of June 30, it had about $8.6 billion in liquidity compared to about $7.8 billion in long-term debt, debt similar to its leasing programs.
That said, it’s not entirely transparent why Tesla’s inventory fell on Tuesday: with the exorbitant valuation in place, the dilution of this new offering is minimal, and increased liquidity will provide the company with an additional cushion in the face of a prolonged recession.
Overall, this is slightly positive for auto investors owning Tesla shares, but it’s imaginable that Tesla investors and enthusiasts were disappointed by the lack of a big money plan, and that’s perhaps why the stock fell today.
More from The Motley Fool
10 shares to buy today
The $16728 Social Security bonus you can’t miss
20 of the main shares to buy (including the two owned by each investor)
What is an ETF?
5 recession-proof actions
How to beat the market
John Rosevear holds no position in any of those mentioned.The Motley Fool owns and recommends Tesla.The Motley Fool has an outreach policy.
Why Tesla shares are now trading down today originally released through The Motley Fool