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Blog Tesla to Raise $2 Billion in Stock Offering

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Tesla plans to raise $2 billion in a new stock offering, the company said Thursday.

Tesla watchers quickly pointed out that Tesla Chief Executive Elon Musk recently said that that the company did not have plans to raise more capital.

“Diluting the company to pay down debt doesn’t sound like a wise move,” Musk said on the company’s Q4 earnings call. 

But, it seems the recent strong performance of Tesla’s stock created an opportunity to raise money at a good price as the company embarks on several capital intensive initiatives.

Tesla’s current efforts include rollout of the Model Y SUV, ramp-up of production at Giga Shanghai, and construction of the company’s first factory in Europe. Tesla also intends to bring to market in the next two years a semi truck, the jaw-dropping Cybertruck, and an updated Roadster intended to deliver a “smackdown” to all other cars.

Tesla said in the SEC filing that it would offer 2.65 million shares, of which Musk will buy up to $10 million in shares, and board member and Oracle co-founder Larry Ellison will purchase up to $1 million worth of shares.

 
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IPO’s are usually offered mainly to large institutional investors. Will Tesla make any available to us faithful small investors in TMC?
This is not an IPO (initial public offering). It is a move to raise cash.

Funny, most people forget that the primary reason to sell stock in a company is to raise cash and not to act as a vehicle by which to gamble to make money on a bet.

Seriously, Tesla could do a stock split if the price keeps going higher. That would be fine by me so that my three shares would become six or nine or twelve shares!
 
This is not an IPO (initial public offering). It is a move to raise cash.

Funny, most people forget that the primary reason to sell stock in a company is to raise cash and not to act as a vehicle by which to gamble to make money on a bet.

Seriously, Tesla could do a stock split if the price keeps going higher. That would be fine by me so that my three shares would become six or nine or twelve shares!
Nice joke ;-)!
 
Musk is brilliant, and with stunning irony: Big shorts betting Tesla will run out of capital answered by solid production and financial results
= stock price increase = short squeeze causing price spike = capital raise at exorbitant price
Who will buy new shares? The shorts of course, running for cover! Even if they could snap up all the shares, less than 10% could cover, virtually guaranteeing that $800 is the low for some months to come. A reverse spiral.
 
  • Funny
Reactions: Big Ike
hmmm, help me on this one. I am not seeing why it. You still end up with the same amount of money invested.
Yes, that is true on Day One. But, if past performance is any indication of future results, the stock price will go up a bit quicker, so your investment will grow dis-proportionally. What's bad is a reverse stock split. I had some precious metals stocks do that and it really hurts.
 
At first it may seem bad for current stockholders: waters down my shares. I now own a smaller percentage of the company than I did. BUT if the money raised is used wisely, then I own a smaller percentage of a more profitable company and I’m better off. With the backlog of orders way over the production capacity, ramping up production seems as if it would be a huge advantage for the company (and therefore for me as a stockholder).
 
Yes, that is true on Day One. But, if past performance is any indication of future results, the stock price will go up a bit quicker, so your investment will grow dis-proportionally. What's bad is a reverse stock split. I had some precious metals stocks do that and it really hurts.
I sort of expected that response :) I just haven't seen that split stock necessarily perform any better aftr the split than before ... at least not in my portfolio.
 
It helps for things like IRA limits. At $767 per share you can only buy 7 shares per year with new contributions in your IRA.

With a 10-1 split if the price goes to $76.7 per share you can buy 78 shares per year - not just 70.

Along with what others mentioned. Based on current price at $800 per share, it doesn’t really matter to institutional buyers who buy a million dollars of shares. But for the individual investor who wants to invest $1000, they can buy one share at $800. But after a 10:1 split they can buy 12 shares at $960. It’s a psychological issue that they’re only able to afford 1 share. I remember in my early days of investing I talked to a guy who said, “I don’t invest in blue chip stocks because I can’t afford the share price”. And that was back in the day when “blue chip“ stocks went for $100 a share.