Tesla to sell as much as $5bn of shares after stock surge

Tesla to sell as much as $5bn of shares after stock surge

But Tesla isn't stopping there: early Tuesday, the company announced a capital raise of up to $5 billion worth of shares via 10 top banks including Goldman Sachs and Citigroup, selling them "from time to time, through an "at-the-market" offering program", the company said in an SEC filing.

The electric auto and solar panel maker says in a filing with securities regulators that it intends to sell up to 10.03 million shares and use the proceeds for unspecified general corporate purposes.

CNBC described how short-sellers are continuing to feel pressure apart from the obvious fact, which is that Tesla's shares have grown exponentially in value in 2020. Apple shares had previously risen 70% this year while Tesla's bounced 435%. Share were down 4.25% in morning trading and then recovered.

We will designate the maximum amount of common stock to be sold through the sales agents on a daily basis or otherwise as we and the sales agents agree and the minimum price per share at which such common stock may be sold.

Miller Tabak chief market strategist Matt Maley said investors who buy shares in the new $5 billion equity offering "are going to get burned".

There will be plenty of areas to spend this new capital.

Tesla does have some expensive projects in the works, including a factory under construction in Germany and a plan to build another in Texas. After the split, the share price should drop to about $400.

Tesla shares rose 2.1 per cent in pre-market trading today after the filing with the US Securities and Exchange Commission. The opening price post split was $444.61.

The prior day, the company's previously announced 5-for-1 stock split, which was aimed at making its shares more affordable for smaller investors, came into effect.

A year ago, Tesla's stock price was around $227.45 (or $45 based on the adjusted price). With gains being sourced from inorganic growth in just a few hot technology names and technical resistance narrowly overhead, the Nasdaq 100 looks vulnerable at a time when volatility historically rises and in a month when stocks are particularly weak.

Some analysts worry Tesla stock has run up too high and warn of a correction.

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