Musk reverses earlier statement about desire for fresh cash.
Tesla has announced a new stock offering this morning that could be worth $2.3 billion (approx. £2.1 billion). The move comes just weeks after CEO Elon Musk stated in the company's quarterly call with analysts that such a move wouldn't make sense. Tesla stock, which had opened sharply down this morning (-$25.45), has been climbing since and has cut that move in half added an additional 1.61% (+$12.39), sitting at $779.68 as of 11:00 A.M.
More about Tesla financials:
- Tesla's market value hits $160 billion, stock price soars to $968
- Tesla is now a $100 billion company for the first time
The California company has been improving its financial situation of late. This, along with the recent achievement of notable goals – it built a new Gigafactory in China and has begun production of the Model 3 there in the unprecedented span of about a year and is expected to begin production of the Model Y months earlier than anticipated – has seen renewed confidence in Tesla and its stock has had a meteoric rise over the past few months. At the start of June 2019, TSLA was trading at $178.97. It just recently hit an all-time high of $968.99.
Although Musk had said it didn't need extra cash, the company certainly has lots of places it could invest further funds. The company has begun initial work on a new Gigafactory in Germany; it's expected to begin production of its Semi heavy-duty hauler later this year and will need to set up a production line; the provocative Cybertruck, unveiled last November and for which it has accumulated over a quarter-million orders undoubtedly needs additional R&D. Also, current and future Tesla owners would certainly not complain if a significant amount was put toward improving its customer service. And all that ignores the fact that it may want to further fund its energy storage and Solar Roof operations.
The reversal of sentiment about the desire for a cash raise did not go unnoticed by the financial press. Phil LeBeau of CNBC noted the turnaround in a tweet this morning, which we have embedded for you. You can also see all the released details of the deal from the press release below.
$TSLA to raise $2 Billion w/ common stock offering two weeks after @elonmusk told analysts: “We are still generating positive cash. In light of that, it doesn’t make sense to raise money because we expect to generate cash despite this growth level.”— Phil LeBeau (@Lebeaucarnews) February 13, 2020