Electric vehicle maker Tesla announced today that they are planning to raise an additional $2 billion from investors this year, easing market fears about the company's liquidity.
Founder Elon Musk, who owns nearly fifth of the company, will buy shares worth as much as $10m in the offer. Tesla said the total proceeds of the offerings could be about $2.3 billion if underwriters fully exercise their option to purchase additional securities. On an unadjusted basis, Tesla dropped $702.1 million$4.10 a share, compared with a loss of $709.6 million, or $4.19 a share throughout the exact same period a year ago.
Tesla said Thursday that it's offering $650 million of common stock and $1.35 billion in convertible senior notes due in 2024 in two separate offerings.
Many analysts, on the other hand, have been saying for several quarters that Tesla needs to raise capital-in the region of US$2 billion to US$4 billion-to start delivering on its bold promises, or as Tesla bears have claimed, simply to keep the company afloat.
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Regardless, it shows how much more Tesla wants to push the Standard Range Plus version of the Model 3, completely crippling it in range without any mention of offering the customer an option to buy back those software-locked miles. Tesla has stayed at around half that level, he said.
Tesla late Wednesday lowered the price of its standard-range version of the Model 3 to $44,999 to come in just under the incentive program's base-model price limit of $45,000, but the automaker says the revamped version can only get 150 km on a charge.
But sales are not the only thing that affects Tesla's cash. That compared to the $2.2 billion in cash reserves the company held at the end of March.
The convert is being marketed with a higher conversion premium than its last convertible bond, issued in March 2017, meaning Tesla shares will have to rise by an even larger magnitude to trigger a conversion to equity.
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No Tesla's were able to qualify for the new Canadian EV incentive of $5,000 that recently passed.
Tesla's junk and convertible bonds opened roughly unchanged from Thursday's close, with the bonds of its SolarCity unit higher, according to Refinitiv data.
Selling new shares often depresses a company's stock price, but Tesla's stock ended the day up 4.3%, a sign that some investors still believe the company can achieve its ambitious goals and are willing to finance those dreams.
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