Tesla announced today that it has completed a $5 billion share sale. Tesla shares had fallen more than 18 percent as of the end of the year, as a result of its unexpected loss to the Standard and Poor’s 500-stock index. Tesla announced on September 1st that it had signed a share distribution agreement with several investment banks to sell up to $5bn of shares.
Tesla said at the time that it would sell $5 billion worth of Tesla common stock from time to time. Today, Tesla announced that it had completed the share offering on September 4th, and that the final settlement of the shares was expected to be completed on September 9th.
Tesla’s move comes at a time when the company’s stock is at a new high. On August 11th Tesla announced a “one-off 5” of its shares, which were formally traded on August 31st. Tesla shares rose 12.57 percent to $498.32, pushing the company’s market capitalization to $464.339 billion, making it the seventh-largest U.S. company by market capitalisation.
But last week, Slager unexpectedly lost out on the Standard and Poor’s 500-stock index, causing the company’s share price to plunge for days on end. Tesla shares continued to fall in pre-market trading today, falling 14.92 percent to $355.92. Tesla shares fell 16.11 percent to $350.92 at the open.
In response, David Trainer, founder of New Constructs, an investment research firm, argues that Tesla stock is the most dangerous stock on Wall Street and that its fundamentals do not support such high prices and valuations. Based on Tesla’s current fundamentals, Tesla’s profits should be much higher than they are now, and valuations should be 1/10 of current levels, Mr Turner said.
In addition, Joseph Spak, an RBC Capital analyst who is bullish on Tesla’s stock, believes that while Tesla has become one of the most important stocks in the U.S. stock market, it is still fundamentally overvalued.