Tesla selling $2B of new stock after frenzied price gains

Daniel Fowler
February 14, 2020

"Diluting the company to pay down debt doesn't sound like a wise move".

After more than doubling in 2020, Tesla's stock has settled back down to a still-huge year-to-date share price rise of almost 88%.

Mr Musk is set to buy up to $10m and Oracle co-founder and Tesla board member Larry Ellison $1m as part of the sale.

Tesla disclosed the new investigation as it announced a surprise $2bn (£1.53bn) stock offering to take advantage of its surging share price. Its market capitalization now exceeds the combined value of General Motors Co GM.N and Ford Motor Co F.N .

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

Tesla said there is no immediate action for Model X owners and they may continue to drive their auto. The company did not immediately respond to a request for further comment on how to reconcile Thursday's announcement with Musk's previous statements.

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Musk's former staunch denials of needing to raise additional and this reversal is likely to raise some concern among investors, according to Wedbush analyst Daniel Ives.

The electric vehicle maker said it plans to use the proceeds from the offering to strengthen its balance sheet and for general corporate purposes.

Tesla will be launching plenty of new products, including the Model Y SUV, its big Semi, and the Cybertruck shown here, all of which cost money.

Musk, a billionaire entrepreneur who reached a regulatory settlement with the SEC in 2018, had brushed off questions as recently as late January about whether Tesla should take advantage of the higher stock prices to raise new capital and expand more rapidly.

Californian vehicle maker Tesla is going to restart production of the previously discontinued Long Range, rear wheel drive Model 3 - but this time, at its Shanghai Gigafactory 3 in China. Barclays, BofA Securities, Citigroup, Credit Suisse, Deutsche Bank Securities and Wells Fargo are additional book-running managers.

If the offering is completed, the number of Tesla shares outstanding will total 183.71 million (or 184.11 million if the underwriters exercise their optional shares) valuing the company at almost $141 billion.

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