Tesla to sell up to $5 billion in stock amid rally

Amid Tesla’s record rise that has seen shares soar to new highs, the company said Tuesday that it will sell up to $5 billion in stock.

The additional shares will be sold “from time to time” and “at-the-market” prices, a filing with the Securities and Exchange Commission said. Banks will sell shares based on directives from Tesla.

The stock retreated from its premarket high following the news, but was still about 3% higher.

Tesla shares have been on fire this year. Through Monday’s close, the electric car maker has gained nearly 500% in 2020. In the last year, shares have gained 1,004% compared with the S&P 500’s 20% rise.

Tesla’s run-up has only gained steam since the company announced its 5-for-1 stock split on Aug. 11. In that time, Tesla shares have rallied 81.3%. That gain includes a 12.6% pop on Monday, when the split took effect. This is despite the fact that stock splits are purely cosmetic, meaning nothing about the company’s underlying business changes.

Tesla’s market cap now stands around $464 billion, according to FactSet.

The rate at which investors have piled into the Elon Musk-led company has left many on the Street puzzled. On Monday night RBC reiterated its underperform rating on the stock, calling the automaker “fundamentally overvalued.” That said, the firm did raise its price target from $170 to $290.

This is a developing story. Check back for updates.

– CNBC’s Fred Imbert contributed reporting.

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