Tesla (NASDAQ:TSLA) has introduced that it’s initiating a $5 billion capital increase on Tuesday. The transfer, which is able to end in a dilution of about 0.8%, is poised to supply a further $5 billion to the corporate’s already formidable steadiness sheet. 

Tesla’s new capital increase announcement comes on the heels of TSLA shares hitting new all-time highs on Monday, pushing the electrical automobile maker’s market cap to over $600 billion. This additional cemented Tesla’s place because the world’s most respected automaker, whereas emphasizing the corporate’s alternatives in different industries corresponding to power storage, photo voltaic, and autonomous driving options. 

As famous by Tesla in a filing, ten main banks, together with Goldman Sachs, Citigroup International Markets, and Morgan Stanley, will likely be conducting the $5 billion sale. Tesla didn’t present an estimated timeline for the capital increase’s completion. 

Contemplating TSLA’s present inventory worth, its $5 billion capital increase will probably contain the sale of lower than 8 million shares. Whereas notable, such a quantity will probably be a tiny fraction of the estimated variety of shares wanted by passive index funds that will likely be shopping for into TSLA when the electrical automobile maker joins the S&P 500. 

With $5 billion extra in its conflict chest, Tesla is poised to finish the 12 months with virtually $20 billion in money. Such a determine would have been inconceivable final 12 months, when TSLA inventory was simply recovering from the blows within the first and second quarter of 2019. Such an quantity, nonetheless, ought to present Tesla with a great amount of money for projects such as Gigafactory Texas and Giga Berlin, each of that are anticipated to start out producing electrical autos subsequent 12 months. 

Tesla has up to now seen an impressive 670% rally in 2020, turning the corporate into one of many S&P 500’s largest inclusions thus far. When Tesla joins the index, it might probably sit simply forward of Warren Buffett’s Berkshire Hathaway, and about $200 billion under social media big Fb. Amidst Tesla’s rally, Elon Musk’s internet value has additionally seen an increase, with the serial entrepreneur now being listed because the second richest individual on this planet, simply behind Amazon founder Jeff Bezos. 

Disclaimer: I’m lengthy TSLA.