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By Akanksha Rana and Tina Bellon
(Reuters) – Tesla Inc on Tuesday unveiled its largest percentage sales program as a public company, to take advantage of Wall Street’s growing interest in the electric car manufacturer to raise up to $5 billion, easing long-term debt pressures.
The move comes a day after a 5-for-1 equity department came into effect, Tesla’s first since its initial public offering in June 2010, and continues to raise nearly six times in its share price this year.
Tuesday’s percentage sale comes when Tesla is looking to massively expand production of its existing cars and build new plants near Berlin, Germany and Austin, Texas.The company also plans to launch new vehicle lines, adding a semi-trailer called Tesla Semi and its futuristic Cybertruck.
Tesla said it plans to use the bid proceeds for its balance sheet and for general corporate purposes.
Craig Irwin, a Roth Capital Partners analyst who holds the equivalent of a “keep” rating on stocks, said Tuesday that capital accumulation is not surprising.
“They’ll want money for all the amenities they’re building and new expansion initiatives,” Irwin said.
Ten primary banks, Goldman Sachs, Bank of America Securities, Citigroup Global Markets and Morgan Stanley, will continue the sale, the automaker said in a dossier, without giving a deadline for its completion (https://bit.ly/3gNy91t).
Morningstar Research analyst David Whiston said it remained to be noticed how many coins Tesla would raise.The company had $8.6 billion in coins and coin equivalents at the end of June.
“I can sense they’re enjoying the action race, but they don’t want cash right now,” Whiston said.
Tesla announced in February that it would raise $2 billion in a percentage bid.
Tesla’s shares, which rose about 8% in early operations before the market, fell to the industry 1% higher the day after the news.
The company’s top-tier shares have risen another 70% since the division was announced on August 11 and were traded to more than $2,000 to the department on Friday.
With a market capitalization of approximately $465 billion, it is the world’s largest automaker through prices in July and boosted CEO Elon Musk’s non-public fortune to more than $100 billion.
Musk has entrusted investors over the following year that Tesla would not want to raise more cash for costly expansion projects or to pay off its debt.
(Akanksha Rana reports in Bengaluru, Tina Bellon in New York; edition through Shinjini Ganguli and Steve Orlofsky)