Traders Renew a Decade-Long Love Affair With Tesla Share Sales


(Bloomberg) -- Funding rounds can spark a sell-off in most stocks. Thursday’s trading shows why Tesla Inc. is not like most stocks.

Tesla shares climbed as much as 6.6% after the electric car maker announced plans for a $2 billion equity offering, reversing an early decline of 4.2%. Analysts said the funding will shore up Tesla’s balance sheet, eventually helping long-term investors who are betting on the company’s success.

It’s the fifth straight time the market has reacted positively to a Tesla stock offering, despite the near-term harm these sales can cause by diluting the value of existing shares. Optimism during the equity raise is particularly notable now given the fresh regulatory inquiry and a vehicle recall.

Fueled by a decade of equity financing, Tesla has returned more than 4,500% since its 2010 initial public offering -- the most of any U.S. IPO since then, according to data compiled by Bloomberg. About $7 billion of Tesla shares have changed hands through secondary offerings, including the one announced on Thursday.

The market’s response to each deal has been almost uniformly positive. Shares jumped 4.3% after Tesla announced its most recent secondary offering last May. The stock rose by as much as 1.2% after a May 2017 sale was announced. Shares climbed by about 2% after offerings were announced in 2015 and 2016, and they surged 8.9% after a 2013 offering launched. Only one secondary offering, in September 2012, caused Tesla shares to fall in the session after the deal launched.

©2020 Bloomberg L.P.

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