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Illustration: Aïda Amer/Axios

The number of U.S. public companies turning to the equity markets to raise cash is at the highest level in at least 10 years, according to data by Dealogic provided first to Axios.

Why it matters: The frenzy comes as companies (battered by the pandemic or not) seize on soaring stock prices to shore up cash.

Flashback: Follow-ons — i.e., equity issuances after a company is already public— slowed to a near halt when the pandemic hit the U.S. in March.

  • But, amid the stock market rebound and as companies’ capital needs skyrocketed, the number of issuances exploded shortly thereafter.
  • In May and June there were 192 of these deals, according to a report last week from RBC Capital Markets. Put another way, more than one-third of all of 2019’s follow-ons were in the span of two months alone.

Driving the news: Tesla said on Tuesday it would issue stock to raise cash for the third time this year.

  • It had raised about $2 billion in February and roughly $5 billion in September.
  • Tesla now plans to raise as much as another $5 billion issuing more stock. Rather than do it all at once, Tesla will sell stock over time at its discretion. (Reminder: Tesla is set to join the S&P 500 in two weeks.)

What they’re saying: Tesla is “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,” Dan Ives, a Tesla analyst at Wedbush Securities, wrote in a note to clients on Tuesday.

  • Elon Musk told the Wall Street Journal yesterday: “We thought we can retire debt and increase the security of the company … probably a good thing. And for less than 1% dilution, it probably makes sense. It could have gone either way.”

The big picture: Tesla has taken advantage of the massive run-up in its share price, which is over 9 times higher than a year ago (adjusting for the stock split).

  • Three major airlines — JetBlue, United and American — all said they would raise capital through stock issuances in the last month. Little to no travel demand means these companies are burning millions of dollars per day.
  • Airline stocks rebounded 32% in the past month as it became clear that vaccines would likely start being distributed before year-end, possibly speeding up a return to normal. (The stocks are still down 25% this year.)
Data: Dealogic; Note: Data includes follow-on and convertible bond deals; Chart: Andrew Witherspoon/Axios

How it breaks down: There have been 797 follow-on deals so far this year — a record dating back to at least 2010.

  • There were also 175 convertible bond deals (which Dealogic tracks as equity issuance) — also the highest in at least the past decade.

Go deeper

Felix Salmon, author of Capital
Jan 29, 2021 - Economy & Business

The unprecedented stock market craziness, in one chart

Data: Bloomberg; Chart: Sara Wise and Andrew Witherspoon/Axios. Note: Stocks limited to companies with a market capitalization of more than $150 million. 

Almost never does a stock trade more than twice its market value in a single day. It never happened in 2001, for instance, and never happened in 2003, and only happened once in 2002.

Driving the news: It has happened 7 times this week already, and 20 times this month. In the past 12 months, it's happened 84 times, which is more than all of the previous occurrences going back to November 1998.

Dion Rabouin, author of Markets
Jan 29, 2021 - Economy & Business

Making sense of the GameStop circus

Illustration: Aïda Amer/Axios

It's probably fair to say that Thursday was one of the crazier days in the history of financial news.

What happened: Robinhood, which has become synonymous with retail trading and the parabolic rise of stocks like GameStop and Tesla, shut down the ability of its users to buy (but not to sell) some of the platform's most popular names.

Stock market has worst week since October amid Reddit frenzy

Photo: Tiffany Hagler-Geard/Bloomberg via Getty Images

Wall Street had its worst week since October as day traders bid up stocks for GameStop, AMC and others that gained popularity on Reddit.

Details: The S&P 500 fell more than 1.9% on Friday. All of the major averages fell more than 3% this week.