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TickerSecurityLastChangeChange %TSLATESLA INC.475.00-23.32-4.68%
The Palo Alto, Calif.-based electric-car maker plans to sell the shares over time, according to a filing. Tesla will use the proceeds to bolster its balance sheet and for general purposes as it forges ahead with plans to build new factories in Austin, Texas, and Germany.
Tesla shares have surged 501% this year through Monday, bolstered by the company in July reporting its fourth straight quarter of profitability, which paves the way for its inclusion into the S&P 500.
Tuesday’s announcement comes a day after Tesla’s stock rallied 13% in the first day of trading since splitting 5-for-1. Tesla finished the session with a $464 billion market capitalization, pulling ahead of Visa Inc. as the sixth-largest U.S. company.
“We believe this is the smart move at the right time,” wrote Dan Ives, a New York-based analyst at Wedbush Securities, who reiterated his $380 price target and $700 bull-case scenario.
He believes the share sales will help Tesla firm up its cash position and slowly chip away at its debt burden, which “throws the lingering bear thesis for Tesla out the window for now.”