Its stock going gangbusters, Tesla plans $2bn share sale

Tesla Recalls Thousands of Vehicles Over Power Steering Issue

Tesla Recalls Thousands of Vehicles Over Power Steering Issue

Tesla's share price hit the brakes Thursday after the electric auto maker said it plans to sell about $2 billion in additional stock.

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.

Tesla's shares were down roughly 1% in morning trading, retracing losses after sliding as much as 7% in premarket trading. Its market capitalisation is now worth more than the value of General Motors Co and Ford Motor Co combined.

Musk has repeatedly assured investors that Tesla will not need to raise more money for costly initiatives including production of a new vehicle model, the ramp-up of its China production and the construction of its first European factory. Especially for a company that doesn't pay a dividend.

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.

The rear wheel drive (RWD) Long Range Model 3 was one of the original configurations available when Tesla first introduced the ground-breaking electric auto in the USA for order in 2016. 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. Tesla said it will use proceeds from the offering "to further strengthen its balance sheet, as well as for general corporate purposes".

Tesla, which started delivering cars in December from its $2 billion Shanghai factory, also sells longer range imported Model 3s with all-wheel drive in China.

CEO Elon Musk will buy as much as $10 million of the shares and board member Larry Ellison, the founder of software giant Oracle, will take another $1 million of them, according to a regulatory filing. Barclays, BofA Securities, Citigroup, Credit Suisse, Deutsche Bank Securities and Wells Fargo are additional book-running managers.

The underwriters will get an option to buy up to $300mn in additional shares.

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