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Tesla has announced a $5 billion at-the-market stock offering.
Here's some thoughts...
Here's some thoughts...
Tesla raising money is always @elonmusk's decision, so this is IMO Elon's decision to take advantage of what he thinks is a very generous stock price given by the market at this time and what he think might change in coming months.
If Elon was 95% confident TSLA would be higher in 6-12 months, then I don't think he would have decided to raise the money now since Tesla already had $14.5b cash at end of Q3.
There's also the signaling issue. By raising money now at this valuation (with already ample cash in the bank), Tesla and Elon are signaling to the market that they think their stock is exuberantly valued at the moment.
This could serve to dampen the price movement somewhat.
This could serve to dampen the price movement somewhat.
You can take the other side and say that the market doesn't care anymore about what Elon thinks about TSLA stock price, and the market will do whatever it wants as evidenced by his last "stock price too high imo" comment.
Another angle to look at it is Elon doesn't really want a super fast appreciation of TSLA because it's not helpful to employee morale. He'd rather have gradual appreciation.
Too fast appreciation leads to euphoria, then if stock lags for years leads to frustration.
Too fast appreciation leads to euphoria, then if stock lags for years leads to frustration.
It's also possible that the S&P 500 committee ask Tesla to consider doing a cap raise to help provide liquidity, and Tesla considered it and thought it was a good idea.
The cap raise will allow Tesla to spend more aggressively, if they need to, on expansion such as new factories and especially their Roadrunner lines. But their existing cash on hand was sufficient already and Tesla could also use positive cash flow from operations to fund.
Tesla could decide to retire some debt if they choose.
But not sure if that's the best use of the money.
Perhaps Elon is eyeing some acquisition targets. But even in acquisition, Tesla can give equity + cash so they might not need a ton of cash on hand.
But not sure if that's the best use of the money.
Perhaps Elon is eyeing some acquisition targets. But even in acquisition, Tesla can give equity + cash so they might not need a ton of cash on hand.
Overall, I do think this cap raise puts a slight dampening effect on the stock price this week. But since it's only 8-9m shares being offered, I'm doubt it's enough shares to make a huge impact in supplying enough shares to S&P index funds by Dec 18th.
