Tesla's $2 billion secondary offering priced at $767 per share, 4.60% below Thursday's closing price. "We are still generating positive cash, so in light of that, it doesn't make sense to raise money because we expect to generate cash despite this growth level". "We'd prefer that to annual capital raises as the company has done via convertible debt or equity", analyst David Whiston wrote in a Thursday note.
Tesla shifted gears Thursday and said it would issue new shares to raise fresh cash, as the electric carmaker responded to the coronavirus epidemic impact on its Shanghai factory and the China auto market. Tesla shares have nearly doubled since the start of the year, and quadrupled since June.
Tesla founder and chief executive Elon Musk plans to buy $10 million worth of the newly minted shares, and board member Larry Ellison, founder of Oracle, is interested in buying $1 million worth of the shares, according to the filing.
Tesla Inc. investors who got in on Thursday's share sale received the steepest discount the electic-car maker has offered in its 10-year history as a public company.
"He is smart to grab cash by selling stock at a sky-high price he might not see six months from now".
Its stock has more than tripled since October when the company posted a rare quarterly profit.
Tesla says it plans to use the cash to strengthen its balance sheet and for general corporate purposes. Its profit and revenue in the last three months of 2019 topped estimates and the company said 2020 deliveries should comfortably beat projections amid demand from new customers. Lead underwriters Goldman Sachs and Morgan Stanley have the option to buy an additional 397,500 shares in the offering. Barclays, BofA Securities, Citigroup, Credit Suisse, Deutsche Bank Securities and Wells Fargo are additional book-running managers.