Tesla Is Still Very Happy To Take Your Money

Illustration for article titled Tesla Is Still Very Happy To Take Your Money
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Tesla’s stock split this week, which was maybe an attempt to get its stock price down to $420 though it felt more like a flex. Tesla’s stock price has soared so high that it simply had no other choice, you see.


Stock splits are usually non-events, but Tesla’s pushed its stock price even higher, show of force that it was. Tesla has, as of this writing, a market capitalization of $442 billion, which is almost as much as Visa.

And after four straight profitable quarters for the company, you’d be forgiven for thinking that Tesla was doing just fine in the money department except that on Tuesday Tesla said it planned to raise more money. Up to $5 billion to be exact, according to a filing with the Securities and Exchange Commission. That money would come from the sale of more stock, and presumably, help pay for Tesla plants in Berlin and Texas as the company seeks to turn the volume even higher.

Tesla did something similar in February, raising $2 billion then, in both cases timing the capital-raising with a surge in its stock price. The latest appears to be a strategy to in part target retail investors, which is what Wall Street calls nonprofessional investors—also known as amateurs—who buy stocks and gamble on the market.

Tesla was already a popular stock with retail investors before the pandemic, and a lot more people have begun gambling on stocks since the pandemic took hold.

From The Wall Street Journal:

David Whiston, an analyst for Morningstar Research, said there will likely be many more factories requiring heavy capital spending, and with the run-up in its stock Tesla can tap what almost amounts to free money.

The shares have risen nearly sixfold this year, including a roughly 80% rise since the company’s stock-split announcement on Aug. 11.

Raising capital over time is a good way to involve retail investors, Craig Irwin, senior research analyst at Roth Capital Partners LLC, said. “They’re going to sell $5 billion of their stock into the open market from time to time for a much smaller fee than they would if they sold straight equity in a secondary [offering].”


Tesla is, in other words, very much riding on its own momentum and its own emotional appeal to investors that may not be able to make a sound business case for it. Not yet anyway. Their argument, as far as I can tell, is not to worry about the business case just yet. Tesla, they say, will get there eventually. You’ll see.

News Editor at Jalopnik. 2008 Honda Fit Sport.


The Stig's Chamorro cousin (Chamorrovirus)

For starters, I do not own a Tesla and I think Elon Musk is a complete douchebag.

That said, FFS - take a minute to let it soak in that a company that didn’t have a product of their own 10 years ago (love the Roadster, but it was a production project-car) now has five times the market cap of Volkswagen. They continue to be the fastest-growing OEM, have a (weirdly, and rabidly) loyal customer base, and are opening factories on what appears to be every last piece of undeveloped real estate on earth.

It’s an astonishing achievement, and I continue to be baffled by it. My bewilderment, however, does not make it untrue.