Tesla Slides After Announcing Another $5BN “At The Money” Stock Offering

At the close of a blockbuster year for Tesla which saw its shares included in the S&P 500, cementing its reputation as “the only stock that matters” (according to some analysts), the company announced on Tuesday morning yet another $5BN at-the-market share offering. It follows a similarly sized offering back in September (though Tesla’s shares have rallied appreciably since then).

Once again, Musk & Co. are proving that selling Tesla stock is perhaps the most effective and lucrative capital-generating strategy available to the electric-car maker.

TSLA slumped on the news in premarket trading, but if the past is any guide, this dip will soon be bought, despite the fact that Elon Musk himself has repeatedly complained about TSLA’s share price being ‘too high’.

Here’s more from the 8-K announcing the offering:

On December 8, 2020, Tesla, Inc. (“Tesla”) entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Goldman Sachs & Co. LLC, Citigroup Global Markets Inc., Barclays Capital Inc., BNP Paribas Securities Corp., BofA Securities, Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, SG Americas Securities, LLC and Wells Fargo Securities, LLC, as sales agents (each, a “Sales Agent” and collectively, the “Sales Agents”), to sell shares of common stock, par value $0.001 per share, of Tesla (the “Common Stock”) having aggregate sales proceeds of up to $5.0 billion (the “Shares”), from time to time, through an “at-the-market” offering program (the “Offering”).

Upon delivery of a placement notice and subject to the terms and conditions of the Equity Distribution Agreement, the Sales Agents will use reasonable efforts consistent with their normal trading and sales practices, applicable state and federal laws, rules and regulations, and the rules of the Nasdaq Global Select Market to sell the Shares from time to time based upon Tesla’s instructions for the sales, including any price, time or size limits specified by Tesla. Under the Equity Distribution Agreement, the Sales Agents may sell the Shares by any method permitted by law, including in ordinary brokers’ transactions, in negotiated transactions, in block trades, and in transactions that are deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended (the “Securities Act”). The Sales Agents’ obligations to sell the Shares under the Equity Distribution Agreement are subject to satisfaction of certain conditions, including customary closing conditions.

The Equity Distribution Agreement provides that the Sales Agents will be entitled to compensation for their services in the form of a commission of up to 0.25% of the aggregate gross proceeds from each sale of the Shares, and Tesla has agreed to reimburse the Sales Agents for certain specified expenses. Tesla has also agreed to provide the Sales Agents with customary indemnification and contribution rights. Tesla is not obligated to sell any Shares under the Equity Distribution Agreement and may at any time suspend solicitation and offers under the Equity Distribution Agreement. The Equity Distribution Agreement may be terminated by Tesla at any time by giving written notice to the Sales Agents for any reason or by each Sales Agent at any time, with respect to such Sales Agent only, by giving written notice to Tesla for any reason or immediately under certain circumstances, including but not limited to the occurrence of a material adverse change in the company. The Offering of the Shares pursuant to the Equity Distribution Agreement will terminate upon the termination of the Equity Distribution Agreement by Tesla or the Sales Agents.

The sales and issuances of the Shares under the Equity Distribution Agreement will be made pursuant to Tesla’s effective shelf registration statement on Form S-3 (File No. 333-231168) (the “Registration Statement”) declared effective by the Securities and Exchange Commission (the “SEC”) on May 2, 2019. On the date hereof, Tesla intends to file a prospectus supplement with the SEC in connection with the offer and sale of the Shares pursuant to the Equity Distribution Agreement.

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Tesla is working with a syndicate of banks including Goldman Sachs, Citigroup, Barclays Capital, BNP Paribas Securities, BofA Securities, Credit Suisse Securities, Deutsche Bank Securities, Morgan Stanley, SG Americas Securities, LLC and Wells Fargo Securities to sell the new issues.

On an unrelated note, the Internet is still buzzing with reports that Tesla CEO Elon “Take The Red Pill” Musk is finally planning to make good on his stated desire to abandon California for the Lone Star State. There’s no word yet on whether Tesla’s corporate headquarters might be moving with him. It goes without saying that $5BN would go a lot further in most parts of Texas than it will in Fremont, Calif.