Tesla Share Offering Rumors Arise After Stock Price Surge

Rumors of a share offering from Tesla Motors  TSLA have been circulating throughout the investor community after the stock's recent tear over the past few trading days.

With Tesla's stock seeing a 96 percent increase in price over the last month and a 50 percent increase in just the past five trading days, traders can't help but wonder if the electric motor company has plans to implement a stock offering. Some believe that the stock's recent rally provides a perfect opportunity for Tesla to sell shares to the public without shaking shareholder confidence.

Initiating a share-offering makes sense for Tesla considering their recent sharp rise in stock price. Selling now would allow Tesla to garner and lock-in a hefty sum of funds. At the same time, dilution of the stock wouldn't be a large concern. “The market cap is so high right now that if they raised $200 million or $300 million, I don't think anyone would be concerned about dilution,” said Ben Schuman, an analyst at Pacific Crest Securities, as reported by the Wall Street Journal.

Offering shares at the stock's current high price would allow Tesla to raise funds for future product development and avoid issuing debt and making future interest payments.

On the company's earnings call last week, Tesla Chairman and Chief Executive Elon Musk said, “we don't have any plans right now to raise funding.” He added, though, that, “it's always possible that we could be opportunistic about raising capital", reported by the Wall Street Journal.