Tesla to Offer $2 Billion of Common Stock

Electric vehicle maker Tesla saw its shares rising on Thursday after the company announced a $2 billion stock offering.

The company will offer 2.65 million Tesla shares through underwriters Goldman Sachs and Morgan Stanley, with expected gross proceeds of $2.3 billion before discounts and expenses.

The company’s CEO Elon Musk will be purchasing as much as $10 million of the stock in this offering and board member Larry Ellison will be purchasing up to $1 million.

It was recently that Musk said Tesla wasn’t planning to raise any more capital. “It doesn’t make sense to raise money because we expect to generate cash despite this growth level,” Musk said.

Shares dropped as much as 6% in premarket trading on the news but reversed those losses when analysts were optimistic about the move.

Wedbush analyst Dan Ives told CNBC’s “Squawk Box” that it will be even more difficult for Wall Street skeptics of Tesla to make their case.

“It’s a smart, strategic move. It takes any doomsday scenario around cash crunch … off the table,” Ives remarked.
Shares closed at $804.00 a share, and hit a high of $818 during intraday trading.

The company said it plans to use the proceeds “to further strengthen its balance sheet, as well as for general corporate purposes.”

Disclaimer: We have no position in Tesla Inc. (NASDAQ: TSLA) and have not been compensated for this article.