Tesla plans $2 billion offering amid stock boom

Marco Green
February 14, 2020

Shares of Tesla Inc (NASDAQ:TSLA) dropped 3% in pre-market trading Friday after it announced a secondary common stock offering of 2.65 million shares at $767 apiece to raise more than $2 billion. But Elon Musk probably isn't losing any sleep over the matter, as the price per share was still more than double any of the company's prior equity raises. "Diluting the company to pay down debt doesn't sound like a wise move".

Tesla's shares initially fell on the news but then rose on Thursday. That discount is over 10 times larger than Tesla's last secondary offering in May, and quintuples the average discount given across its seven prior share sales.

CEO Elon Musk will purchase up to $10 million in shares in the offering, while Oracle co-founder and Tesla board member Larry Ellison will buy up to $1 million worth of Tesla shares, according to the securities filing.

In addition to the stock offering, Tesla released its audited 2019 annual report early Thursday and disclosed that on December 4, the Securities and Exchange Commission issued a subpoena seeking information concerning "certain financial data and contracts including Tesla's regular financing arrangements".

"He is smart to grab cash by selling stock at a sky-high price he might not see six months from now".

The automaker said it will use the funds it raises to "further strengthen its balance sheet, as well as for general corporate purposes".

Its stock has more than tripled since October when the company posted a rare quarterly profit.

Tesla raised about $2.3bn in May to start production in China and spend on developing new models, including the high-volume Model Y SUV and a Semi commercial truck, whose launch has been delayed due to a lack of battery production capacity.

Goldman Sachs and Morgan Stanley are the lead joint book-running managers.

Other reports by Click Lancashire

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