Tesla to Raise $2 Billion from a Stock Offering

Feb 13 14:02 2020 Print This Article

Shares of Tesla (TSLA) are down a few dollars this morning after the company said it will float $2 billion in stock.

I have a simple rule in these matters. A company raise as much as they can get away with. By this I mean, raise as much to the point that it won’t hurt your stock.

Outside of a few percentage points today, shares of Tesla have rallied spectacularly since June. As such, it’s completely responsible to raise money from new investors. If people want to overpay for your stock, then the company has every right to benefit from that.

On this issue, I’m a complete pragmatist. Companies shouldn’t worry about what economic models say. If the market is cool with it, then you’re right. If it’s not, then you’re wrong.

I wouldn’t be surprised if Tesla closes up today.

By the way, this raises an interesting theoretical point. If we view the market as a contest between a stock’s market price and its true underlying value, what Tesla is doing blurs that line.

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Crossing Wall Street

As an experienced fund manager, Eddy Elfenbein created Crossing Wallstreet to help investors avoid the mistakes that separate successful investors made. The key to doing well on Wall Street is actually very simple: Buy and hold shares of outstanding companies. But too many investors never learn this valuable lesson. He gives investors his free and unbiased view of the market. Eddy analyze's dozens of companies every week and is always looking over income statements and balance sheets. He's spent several years collecting a list of the best companies to own. His buy list is on Crossing Wallstreet. All of the information on this site is free and unbiased.

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