'Tesla will make up to $5 billion in paid-in capital increase'

Tesla, a U.S. electric car company led by Elon Musk, will make up to $5 billion in paid-in capital increase. Experts say the latest capital procurement will increase cash flow and slow down the debt situation.

According to CNBC and Reuters on the 1st (local time), Tesla submitted the plan to the U.S. Securities and Exchange Commission (SEC). Tesla explained that the paid-in capital increase does not take place all at once, but is sometimes carried out in the form of selling stocks and pricing them according to the market price at that time. Tesla explained that it will use funds raised through paid-in capital increase to improve its financial structure.

The paid-in capital increase will be organized by 10 large banks, including Goldman Sachs and Bank of America. The capital increase is the largest ever for Tesla. Tesla has raised a total of $14 billion in paid-in capital increase over the past decade.

As for Tesla, it seems that it is the best time to raise capital in the stock market and reduce debt at this time when stock prices are on a high march. Tesla's stock price soared nearly 500 percent until the previous day this year when the novel coronavirus outbreak (Corona 19) broke out.

Analysts say that the five-to-one stock split, which has been applied since the previous day, has made it easier for individual investors to access, making it the best condition for paid-in capital increase. Tesla's share price jumped 81.3 percent between April 11 and 20 when its plan to split its shares was announced.

Dan Ives, an analyst at U.S. Wedbush Securities, told CNBC, "This is a wise move," adding, "It will increase cash liquidity and allow us to slowly get out of debt."