Why Tesla’s share sale is a smart move

(Wedbush) – Tesla (NASDAQ:TSLA) is flat in premarket trading after disclosing a $5B capital raise.

Wedbush Securities analyst Dan Ives thinks the company struck at the right time to raise some funds.

“We believe this is the smart move at the right time for Musk & Co. after the parabolic rally in shares with the appetite strong among investors to play the transformational EV trend through pure play Tesla over the coming years.”

“Now in a clear position of strength and out of the red ink, Musk and his red cape are raising enough capital to get the balance sheet and capital structure to further firm up its growing cash position and slowly get out of its debt situation, which throws the lingering bear thesis for Tesla out the window for now.”

Ives sums up by saying the capital raise is a clear positive for Tesla and further solidifies the firm’s bull case price target scenario of $700 ($3,500 pre split). The base case price target is $380.

Taking emotion out of the equation, Tesla ranks in the top 20% of all stocks run through the Seeking Alpha Quant Rating tool.