Written by Norman Isaac Mwambazi

Tesla set to sell $5 billion worth of shares in an ‘at-the-market-offering’ ahead of S&P 500 inclusion

Two weeks ago on November 16, 2020, the S&P Dow Jones Indices announced that automaker Tesla (ticker: TSLA) will be …

Two weeks ago on November 16, 2020, the S&P Dow Jones Indices announced that automaker Tesla (ticker: TSLA) will be included on the S&P 500 before the opening of trading on December 21.

There was consultation by S&P 500 among investors whether the company’s heavy stock should be added all at once, or in two phases.

On Monday, November 30, 2020, the automaker got good news from S&P 500 indicating that the company’s stock would be added all at once, at its full weighting on the proposed date of December 21, 2020.

Since the announcement of the company’s inclusion on the benchmark S&P 500 last month, Tesla’s market capitalisation has shot to $605.61 billion, up by over $200 before the big announcement. Its shares have also risen more than 57% since the November 16 announcement.

The automaker has now said that it will sell around $5 billion in shares in an ‘at-the-market-offering’ heading into its debut on the benchmark. The company’s stock is currently going at $638.77 per share although this is slight slip from its record high.

Tesla unveiled the ‘at-the-market’ offering in a Securities and Exchange Commission that followed data from the China Passenger Car Association.

The data reports that Tesla sold 21,604 China-made vehicles in the world’s largest car market last month, nearly double the October total and well ahead of the 11,329 sold in September, thanks in part to a resurgence in consumer demand.

These figures should help the carmaker inch closer to its goal of moving 500,000 cars over the whole of 2020, a target that requires over 166,000 cars to be sold in Q4. 

Tesla shares were marked 1.33% lower in early trading on Tuesday, December 8, 2020, following news of the share sales to change hands at $633.20 each, trimming gains since the stock’s five-for-1 split on August 31 to around 28%.

It should be noted that Tesla became eligible for inclusion on the S&P 500 following five consecutive quarters of reporting profits.