Tesla Stock – Companies are selling stock at record pace to start the year
Public companies have been taking advantage of a hot stock market by issuing shares at record pace in January.
U.S.-listed companies have conducted 80 follow-on stock offerings this year through Friday, raising $16.35 billion. Both numbers are records for this point in the year, according to Dealogic data going back to 1995.
Many of the offerings have been from small pharmaceutical and other health-care firms. Also in the mix: pandemic-era videoconferencing star Zoom Video Communications Inc., which raised $2 billion in the largest such offering this year as it looks to build out its operations.
On Tuesday afternoon alone, 18 U.S.-listed companies unveiled plans for secondary or follow-on offerings, according to the financial-news organization StreetInsider.com.
The offerings coincide with voracious investor demand for stock: The S&P 500 has risen 2.3% this year, setting repeated highs after rallying 16% last year. At the same time, many biotech and pharmaceutical companies are eager to raise money for new drug candidates or vaccine research and trials.
“There’s a tremendous appetite for equity, both U.S. and now increasingly international,” said Jerry Braakman, chief investment officer at First American Trust. “When you have such investor demand for equities and continued cash flow into the market, it’s a great time to issue—initial offerings as well as obviously secondary and follow-up offerings.”
Investors crowded into initial public offerings at a record rate in 2020. Companies raised $167.2 billion through 454 offerings on U.S. exchanges through Dec. 24, surpassing the previous full-year record for money raised that was set during the dot-com boom in 1999. The IPO market was boosted by a surge in special-purpose acquisition companies, which use money from an initial public offering to merge with another company. U.S.-listed SPACs raised $82 billion in 2020, a more-than-sixfold increase from the year earlier.
The fundraising boom extends beyond stock issuance. Corporate borrowing took off in 2020, fueled by the Federal Reserve’s response to the coronavirus pandemic, with U.S. companies breaking records for debt issuance.
The strong start to the year for follow-on stock offerings builds on a record-setting 2020. U.S.-listed companies conducted 862 such offerings last year, raising $257.23 billion, the most in a year by either measure in records dating to 1995, according to Dealogic.
Last month Tesla Inc. said it intends to raise as much as $5 billion through new sales of stock, selling the additional shares over time at market prices. The electric-vehicle company’s shares surged eightfold in 2020, and in late December it joined the S&P 500.
The interest in issuing shares to raise money isn’t limited to U.S.-listed firms. BYD Co., a Chinese car maker backed by Warren Buffett, said this week that it raised $3.9 billion from a stock sale, the company’s largest equity financing since it listed in Hong Kong in 2002. BYD makes electric cars, batteries, plug-in hybrids and fossil-fuel-powered vehicles, and investor interest in green cars and battery technology has sent the company’s stock soaring.
This story has been published from a wire agency feed without modifications to the text.