Tesla Motors Inc. said Thursday that it plans to sell $500 million in stock to fund its hefty spending on projects like the Model 3 vehicle and its Nevada battery factory.
Founder and CEO Elon Musk has indicated that he may purchase approximately $20 million worth of the shares on offer, all of which are new shares being issued by the company. Tesla could make up to $566.5 million if the underwriters exercise their option to buy additional shares.
Some might suggest the Tesla stock price is far more important to Mr Musk’s fortune than the impact of $20m spent in a symbolic show of support to the latest fundraising.
Shares of Tesla Motors (NASDAQ:TSLA) traded down 1.56% during midday trading on Friday, hitting $237.37.
The possibility of margin calls causing Mr Musk to sell stock, in the event of a share price decline, is listed as a risk factor by Tesla. They set a buy rating and a $350.00 price target on the stock.
Other equities analysts also recently issued research reports about the stock. Tesla Motors has a 1-year low of $181.40 and a 1-year high of $291.42.
Tesla has aspirations to be a significant manufacturer of batteries, as well as introducing a third model of electric vehicle, which requires investment, about $1.5bn for this year alone, it predicts.
Demand for Tesla’s stock seems to outstrip demand for the company’s cars. The stock was sold at an average price of $264.53, for a total value of $396,795.00. The stock was sold at an average price of $264.33, for a total transaction of $2,643,300.00.
Tesla, which has been losing more than $4,000 on every Model S electric sedan it sells, had $1.15 billion in cash and equivalents as of June 30, down from $1.91 billion as of December 31.
Several incremental delays in the start of volume Model X production have pushed out the time at which that vehicle’s sales could start to contribute noticeable income to Tesla.
Why is Tesla making this move now?
The company announced a number of supercharging stations in Sydney in December last year, each of which is capable of bringing the flagship Model S vehicle from a 0 to 50 percent charge in 20 minutes, with a full charge taking just under an hour. The Business uses manufacturing procedures and energy management technologies developed because of its vehicle powertrain systems and develops stationary energy storage products for use in houses, commercial sites and utilities. Other safety amendments include Tesla closing off the path, which the researchers used to achieve access on the infotainment system.
