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Tesla (NASDAQ: TSLA) plans to raise up to $5 billion in its third share sale this year as the EV maker looks to capitalize on the surge in its stock over the past year.
Tesla may offer and sell from time to time common stock having an aggregate offering price of up to $5 billion, the company said on Tuesday, when its market capitalization was exceeding $608 billion.
After news of the third share offering this year broke, Tesla's shares dropped by 2 percent in pre-market trade and were trading at $641 each.
The share sale, for which the EV maker didn't give a timeframe, is the third such offering from Tesla in 2020, after one in February and another share sale announced in September.
In early September, Tesla said it would sell additional common stock worth up to $5 billion, days after its five-for-one stock split took effect.
Tesla's shares have soared by 667 percent year to date and by 855 percent since this time last year.
One of the most recent rallies took place after S&P Dow Jones Indices said in the middle of November that Tesla would be added to the S&P 500 effective prior to the open of trading on Monday, December 21.
Earlier this month, S&P Dow Jones Indices said that Tesla would be added to the S&P 500 index all at once at its full market capitalization before trade opens on December 21. The move will see the most valuable company ever to join the index. Tesla will join the S&P 500 in a single tranche despite its massive market capitalization.
Analysts expect high volatility of Tesla's stock in the coming weeks before the electric vehicle maker joins the index. Tesla's addition to the S&P 500 will lead to massive trades by funds tracking the index because they would have to sell shares in other companies in the index and buy Tesla stock in order to accurately reflect the weighting in the index after December 21.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com