The Hidden Winners From Tesla's Stock Offering
Tesla (NASDAQ: TSLA) has been in the stock market spotlight lately, as its stock has soared so far in 2020. In less than two months, the stock has more than doubled, closing above the $900 per-share mark and leaving most investors scrambling to figure out what's likely to come next.
In mid-February, after the share price had already risen substantially, Tesla decided to do a secondary stock offering with the idea of raising about $2 billion. Although the $767 per-share price for the offering came at a significant discount to where shares had traded immediately prior to the announcement, the electric-vehicle maker still successfully demonstrated that there was ample demand among shareholders to buy Tesla stock at lofty levels. Moreover, those investors who participated in the secondary offering have gotten a nice profit, as the stock has moved even higher.
Yet as profitable as the purchases have been for those new shareholders, there were some other, less obvious winners from the Tesla stock offering: the institutions that underwrote the deal. Not only did they please their customers by providing them discounted shares of the electric-car company, but they did so without bearing any risk whatsoever.
Source Fool.com