Tesla prices second stock offering at $767 apiece

  • Tesla prices second stock offering at $767 apiece

Tesla prices second stock offering at $767 apiece

Electric auto maker Tesla has announced plans to offer around $2bn of common stock.

While Tesla stock dipped on Thursday as investors anticipated the new shares would drive down prices, they are still up 83 percent so far this year after a string of positive developments, including higher price targets from Wall Street analysts and Panasonic's announcement that its battery partnership with the company posted its first quarterly profit.

Tesla warned in the filing that its shares have gone as high as $968.99 per share to as a low of $176.99 during the past 52 weeks. "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 has priced its secondary common stock offering at $767, a 4.6% discount from Thursday's share price close, according to a securities filing Friday.

CEO Elon Musk will purchase up to $10 million in shares in the offering, while Oracle co-founder and Tesla board member Larry Ellison will buy up to $1 million worth of Tesla shares, according to the securities filing.

"Despite Musk's bravado about Tesla's finances, the company needs billions of dollars to finance growth", said Erik Gordon, a professor at the University of Michigan's Ross School of Business.

"He is smart to grab cash by selling stock at a sky-high price he might not see six months from now".

Tesla said it will use the funds 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.

Goldman Sachs and Morgan Stanley are the lead joint book-running managers.

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