Investor's Corner

Tesla (TSLA) completes $5 billion stock offering, plunges after S&P snub

The Fremont factory. (Credit: Tesla)

Recent filings to the Securities and Exchange Commission (SEC) have revealed that Tesla (NASDAQ:TSLA) has completed its $5 billion stock offering, potentially explaining part of the weakness that was observed by investors late last week. The SEC filings were disclosed by Tesla on Tuesday. 

According to the electric car maker, the final settlement of the offering is expected to be completed on September 9, 2020. The company also revealed that the sale of $5 billion worth of TSLA stock was completed last Friday, September 4.

“On September 4, 2020, Tesla, Inc. completed the sale of $5.0 billion (before commissions) of its common stock through its “at-the-market” offering program previously disclosed on September 1, 2020. The final settlement of the shares sold is expected to be completed by September 9, 2020,” Tesla wrote on its Form 8-K. 

Tesla stock continued to slide on Tuesday, dropping over 14% in pre-market trading. While part of these headwinds may be the completion of the $5 billion TSLA stock offering, other factors, such as the electric car maker not being included in the S&P 500’s recent rebalancing, may have also added some negative sentiments towards the electric car maker. 

During the S&P’s announcement on Friday, the index added Etsy, equipment manufacturer Teradyne, and pharmaceutical firm Catalent to the S&P 500, replacing H&R Block, beauty firm Coty, and retailer Kohl’s. Interestingly enough, Tesla and Zoom, both of whom have qualified for the S&P 500 and are far larger than companies like Etsy, were not included in the update. 

In a note on Friday, Tesla bull and Baird analyst Ben Kallo stated that it remains unclear why the electric car maker was not included in the S&P 500’s update. “Unclear why [Tesla] was not included in the recent rebalancing cycle, though we do think the stock will be eventually added to the S&P 500, having fulfilled all inclusion criteria,” Kallo wrote in his note to clients. 

It should be noted that Etsy, Teradyne, and Catalent were all part of the S&P MidCap 400, making last Friday’s update more of a rebalancing of the S&P. Considering that neither Tesla nor Zoom are part of the S&P MidCap 400, there may be hope for the companies yet. Nevertheless, even with its current headwinds, Tesla has still soared 400% year to date through Friday, far outperforming the S&P 500, which has surged 6.1%. 

Tesla stock opened on Tuesday -14.68% at $358.71 per share. 

Tesla’s 8-K form about the completion of its $5 billion stock offering could be accessed below.

tesla-form-8-k by Simon Alvarez on Scribd

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

Tesla (TSLA) completes $5 billion stock offering, plunges after S&P snub
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