Tesla is striking while its share price — and ballooning market cap — is hot, filing today to sell $5 billion in shares after investors bid its equity to record levels.
The newly announced dilutive fundraising event is having a muted impact on its value, which is off 2.3% in pre-market trading as investors digested the news. Tesla’s market capitalization is $608 billion, meaning the stock sale is representing less than 1% of its value.
Tesla is working with Goldman Sachs, Citigroup, Barclays, BNP Paribas, BofA, Credit Suisse, Deutsche Bank, Morgan Stanley, SG Americas Securities and Wells Fargo, according to a filing Tuesday with the U.S. Securities and Exchange Commission. The same filing notes that Tesla will sell these shares “from time to time” and “at market prices.” Tesla said it will pay the banks a “commission of up to 0.25% of the aggregate gross proceeds” of the shares that they sell, or a maximum of $12.5 million.
Tesla has turned to the market before to access capital. This is the second time in three months that the company has turned on the share-sale spigot. In September, Tesla said it would sell $5 billion in shares from “time to time,” according to an SEC filing.
The American electric car company closed its third quarter with operating cash flow of $2.4 billion, and free cash flow just under $1.4 billion. Tesla wrapped the September quarter with a staggering $14.5 billion in cash and equivalents, implying that Tesla is more taking advantage of a market moment than working to shore up its current accounts. However, it should be noted the vast number of capitally intensive building projects that Tesla has underway, including factories in Berlin and near Austin. It has also seen its operating costs rise over time. In the third quarter, Tesla reported operating costs were $1.25 billion in the third quarter, a 34% pop from $930 million in the same quarter last year.
Tesla shares have a 52-week low of $67.02, according to Google Finance. They also have a 52-week high of $648.79, a price that was set yesterday. It’s a good time to take some cream from the top.