Tesla Aims To Offer $2B In Common Stock

Only two weeks after Chief Executive Elon Musk indicated that Tesla was not looking to bring in more capital, the electric automaker says it intends to have a $2 billion common stock offering. Larry Ellison will purchase as much as $1 million, while Musk will purchase as much as $10 million in shares in the offering, CNBC reported.

Musk said two weeks ago that the company did not intend to raise more funds as it was “spending money, I think, efficiently, and we’re not artificially limiting our progress.” He also noted, “It doesn’t make sense to raise money because we expect to generate cash despite this growth level.”

Musk’s thoughts were reportedly mirrored by Zachary Kirkhorn, CFO, during the firm’s Q4 earnings report. The firm, however, has had many significant expenses in the year like new factories in Berlin and Shanghai, as well as big investment in battery and self-driving technologies.  

In an announcement, the electric automaker said that it “intends to use the net proceeds from the offering to further strengthen its balance sheet, as well as for general corporate purposes.” Morgan Stanley and Goldman Sachs & Co. LLC are serving as lead joint book-running managers. 

BofA Securities, Credit Suisse, Citigroup, Barclays, Wells Fargo Securities and Deutsche Bank Securities are serving as additional book-running managers, with Societe Generale functioning as co-manager.

Tesla’s shares dropped as much as 6 percent in premarket trading and opened lower after the announcement. The stock, however, reportedly “turned positive” per CNBC as investors, as well as analysts, viewed the move as a method to bolster its balance sheet and potentially further plans for growth.

In separate news, Tesla delivered 112,000 vehicles globally with a chart-topping fourth quarter that exceeded Wall Street estimates. The Street expected the company to deliver 106,000 vehicles in the quarter. Tesla said it delivered 19,450 Model S and X vehicles in addition to 92,550 Model 3 cars over Q4.