Tesla Lays Out New Plan to Sell $5 Billion Worth of Its Stocks to Further Its Course

UTC by Steve Muchoki · 3 min read
Tesla Lays Out New Plan to Sell $5 Billion Worth of Its Stocks to Further Its Course
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Tesla plans to sell its stocks worth $5 billion through banks. Wedbush analyst Dan Ives called this idea a “smart move”.

Leading electric vehicle manufacturer Tesla Inc (NASDAQ: TSLA) has been reorganizing its strategic plans to raise capital meant to further its future course. After splitting its shares sometimes last week, the Tesla company has now announced that it plans to sell $5 billion worth of its stocks through banks.

The company disclosed that the additional shares will be sold “from time to time” and “at-the-market” prices.

Tesla outstanding stocks stand at 931.81 million at the moment with a $464.34 billion market capitalization. TSLA shares were trading around $481 during the pre-market, 1.25% up from yesterday’s close.

With the company’s continued sell pressure on its shares, the value is highly susceptible to volatility, especially in the downside. However, most Tesla investors are long term, whereby the company is set to largely benefit from the unexploited global EV market.

“We intend to use the net proceeds, if any, from this offering to further strengthen our balance sheet, as well as for general corporate purposes,” Tesla said.

This comes amid the upcoming competitors including Xpeng which went public through NYSE late last month. Led by the ambitious engineer Elon Musk, the company has been improving on its product to suit all types of consumers.

This included producing cheap, more quality batteries that are capable of delivering 1million miles. In addition, the company presented its Cybertruck dubbed to take over the global market by a huge storm.

Analysts Call on Tesla Move on Its Stocks

Wedbush analyst Dan Ives called the capital raise a “smart move,” citing strong appetite among investors to “play the transformational EV trend through pure-play Tesla over the coming years.”

“Elon Musk is raising enough capital to get the balance sheet and capital structure to further firm up its growing cash position and slowly get out of its debt situation, which throws the lingering bear thesis for Tesla out the window for now,” Ives added. Notably, Wedbush has a neutral rating on the stock and a base target of $380.

However, not all who agree on the possible bright future of the Tesla stock. Miller Tabak, chief market strategist Matt Maley, warned that shares are due for a pullback. Those “who buy stock in TSLA on the new $5bn equity distribution they announced this morning are going to get burned,” he said.

“Even if this stock rallies a bit more over the next week or two, it’s going to be trading at least 30% below today’s level before the end of the year in our opinion,” he added.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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