Mon, August 15, 2022

Tesla Plans to Raise $2 Billion

The electric vehicle maker and stock market

Famous electric vehicle maker priced its secondary common stock offering at $767 a share. According to the company, it will sell 2.65 million shares at that price. Tesla plans to raise more than $2 billion.

Moreover, the price is a 4.6% discount to its close Thursday. Interestingly, Tesla’s CEO Elon Musk will buy $10 million, and Oracle billionaire Larry Ellison will also purchase the share. Ellison will buy $1 million worth in offering according to the information provided by the California-based company.

The shares of Tesla fell 2.6% in Friday’s premarket. One day before, shares of vehicle maker gained 5%. It is worth mentioning that from the beginning of the year, shares rose 92% as of Thursday. The company’s decision showed there is continued demand for the stock.

Another interesting fact is that lead underwriters Goldman Sachs and Morgan Stanley have the opportunity to buy an additional 397,500 shares in the offering.

Tesla’s decision surprised analysts as only two weeks ago, Elon Musk stated that Tesla had no intention or need to raise any more capital. The company plans to use the funds for general corporate purposes as well as to strengthen its balance sheet.

On Thursday, electric vehicle maker mentioned health issues as a risk factor for the first time. Tesla underlined this problem in a filing on Tuesday.

Tesla’s Gigafactory in New York StateStocks and U.S. carmaker

According to the preliminary information, Tesla will be able to meet its workforce goals in its Gigafactory in the State of New York.

Moreover, the company reportedly needs to hire only a few hundred workers to meet its target for April 2020.

As a result, the company will avoid a potential $21.2 million penalty.

The initial purpose of the Gigafactory in New York was to produce the company’s residential energy product the Solar Roof among others. However, Tesla is also using this factory to produce its electric cars. The company received benefits for this factory and in a couple of months, should fulfill the obligation, which is to provide jobs to 1,460 employees by April.

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