By Matt Grossman
Tesla Inc. plans to raise as much as $5 billion through new sales of stock, capitalizing on a market tear that has sent its shares zooming this year.
The Palo Alto, Calif.-based electric-vehicle company said Tuesday that it would sell the additional shares over time at market prices. The company raised the same amount of money through a similar program it rolled out in September.
Tesla's share price is more than nine times higher than it was a year ago after adjusting for a recent stock split, as the company has been able to improve its liquidity and keep its streak of profitable quarters going -- now up to five -- amid the coronavirus pandemic. Last month, S&P Dow Jones Indices said Tesla would be added to the S&P 500 index in December, boosting the stock's mainstream appeal.
The fundraising coincides with significant investments in the company's production capacity. Tesla is planning to start work on a new U.S. factory in Austin, Texas, and is also building a plant in Berlin.
Plans to boost capacity contributed to Tesla's projections for capital spending in 2021 and 2022. In October, Tesla's finance chief, Zachary Kirkhorn, told analysts the company expects capital spending of $2 billion to $2.5 billion in each of the next two years.
Tesla executives have also emphasized reducing operating costs as investors watch the trajectory of the company's profits. Founder and Chief Executive Elon Musk has spoken about the challenge of growing the company's capabilities at a rapid clip while also keeping operations lean.
"We're really just trying to spend money at the fastest rate that we can possibly spend it and not waste it," Mr. Musk told analysts in October. "We will certainly waste some of it, but trying to not waste too much of it, this is very difficult." Mr. Musk will be interviewed at The Wall Street Journal's CEO Council summit Tuesday during the 2 p.m. ET hour; the interview will be streamed on wsj.com.
Colin Rusch, an analyst at Oppenheimer & Co., said Tesla has made a good start on that front.
"They have rationalized costs over the last couple years effectively," Mr. Rusch said. The company's recent track record supports a solid outlook for the stock, he added.
"We're watching execution very closely, of course, but there's a very large opportunity and we think they have a substantial lead over the competition," Mr. Rusch said.
In the quarter that ended in September, Tesla logged a profit of $331 million on sales of $8.77 billion, up 39% from a year earlier. Mr. Kirkhorn said the company continued to aim to deliver 500,000 vehicles in 2020, a goal it set before the coronavirus pandemic and that he said had been made more challenging by interruptions caused by the public-health crisis.
Tesla, founded in 2003, completed a 5-for-1 stock split in August, which made the company's shares more affordable for individual investors. The ability to buy fractional shares, a trading method that has gained popularity this year as more brokerages such as Charles Schwab Corp. have added the feature, has also brought more individual investors to Tesla and other companies with lavish stock prices.
Write to Matt Grossman at matt.grossman@wsj.com
(END) Dow Jones Newswires
12-08-20 1131ET
