Tesla's $5B stock offering taps skyrocketing value

Shares were up 667% this year

Tesla Inc. plans to raise $5 billion through a common stock offering, capitalizing on a soaring share price following its inclusion in the S&P 500.

The funds raised from the “at-the-money” offering will be used to shore up the electric-vehicle maker’s balance sheet, according to a regulatory filing out Tuesday. Tesla had $8 billion debt, excluding vehicle and energy financing, at the end of its fiscal third quarter.

Ticker Security Last Change Change %
TSLA TESLA, INC. 728.10 +9.11 +1.27%

Wedbush analyst Dan Ives called the decision "another smart strategic move" while adding, "We believe this capital raise is a clear positive and further solidifies our bull case price target scenario of $1,000 with our base target $560" while keeping his neutral rating on the stock.

Shares fell as much as 3.2% ahead of the opening bell.

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The stock offering is the third to be announced by Tesla this year as the company has taken advantage of several run-ups in its share price that have produced a 667% year-to-date gain and lifted its market capitalization to $608.32 billion. Only five S&P 500 companies have a value above this level.

Tuesday's announcement comes as shares have soared 57% since S&P Dow Jones Indices announced on Nov. 16 that Tesla would be added to the S&P 500. The stock hit $641.76 per share Monday.

The Palo Alto, California-based company in September issued $5 billion of stock a day after shares spiked 13% in response to news of a 5-for-1 split. In February, Tesla raised $2 billion following an 83% surge in its stock price over the first 42 days of the year.

Tesla’s runaway share price has resulted in more than $35 billion of losses this year for short-sellers who have bet against the stock, according to financial analytics firm S3 Partners.

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Noted Tesla bear Jim Chanos, founder of New York-based Kynikos Associates, last week told Bloomberg News that being short the stock has “been painful” and that he has trimmed his position.