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Tesla will raise 2 billion in funds two weeks after Elon Musk said they were not necessary

February 13, 2020

Musk will buy up to 10 million dollars in the new shares while board member Larry Ellison will spend a million on them.

3 min read

The opinions expressed by employees are personal.

Tesla will raise 2 billion in funds two weeks after Elon Musk said they were not necessaryTesla will raise 2 billion in funds two weeks after Elon Musk said they were not necessary

Tesla said Thursday that he plans to raise two billion dollars by selling shares through a public offering, just two weeks after the CEO, Elon Musk, said the company was not looking to raise new funds.

Musk will buy up to 10 million in shares of the new offer, while Oracle board member and co-founder Larry Ellison will buy Tesla shares worth $ 1 million. Likewise, insurers will have the option of buying up to 300 million in additional shares.

In the company's fourth-quarter earnings call on January 29, Musk said it “makes no sense” to raise capital given Tesla's current status.

“We are actually spending money as fast as we can spend it sensibly,” he said in response to a question from investors.

“So, if there is a sensible way to spend money, we are spending it. There is no artificial withholding of expenses. All I see is that it seems to be good value for money, the answer is yes, immediately. Then we are spending money, I think, efficiently and we are not artificially limiting our progress. And despite all that, we are still generating positive cash. So, in light of that, it makes no sense to raise money because we hope to generate cash despite this level of growth. ”

The electric car manufacturer said it plans to use the proceeds of the offer to strengthen its balance sheet and for general corporate purposes.

The company's shares fell around 4% in the first operations after the announcement of the offer. Tesla this Thursday morning also presented its annual report for 2019.

Despite the fall in the shares, some Wall Street analysts praised the measure to raise money.

“This will be a bit shocking for some, given that the company talked about the need to raise capital at its recent conference, although the bulls (with which we agree) will say that this essentially starts the band and eliminates the monetary crisis of the end of the world scenario that some forecasted in the future, “said Daniel Ives, Wedbush analyst, in a note to customers.

“In our opinion, the size of this offer is larger than many had anticipated, but we believe it is a smart move by Musk and the board to take advantage of being once again in a position of strength with the street and focusing in raising capital at the same time when the demand for electric vehicles is just beginning to inflect with China, the main fuel in the growth engine. ”

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