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Tesla successfully manages to raise $2.31 billion in a stock offering after the TSLA stock saw a massive run-up to above $900 levels on Wednesday, February 19. The company plans to use these funds by making investments in Europe.
On Wednesday, February 19, electric car maker Tesla Inc. (NASDAQ: TSLA) made an important announcement by closing its common stock offering. Just a week after its first announcement, the American automaker netted a whopping $2.31 billion in the offering.
The company sold a total of 2.65 million shares to the public. On the other hand, the deal’s underwriters exercised their option to buy another 397,500 shares worth around $300 million. Reportedly, Tesla CEO Elon Musk himself purchased $10 million worth of new shares. Similarly, board member Larry Ellison ended up buying $1 million in stock. Announcing this stock offering, the company said:
“The Offering, including the sale of shares of Common Stock subject to the Underwriters’ option, closed on February 19, 2020, and the net proceeds were approximately $2.31 billion, after deducting underwriting discounts and commissions and estimated offering expenses”.
The Tesla (TSLA) stock had a massive run in the last three trading sessions before finally entering the correction today. As on Wednesday closing, the Tesla share was priced at $917 per share taking the company’s valuations to $168 billion.
However, we are seeing a sharp correction as the market opens today. At press time, the TSLA stock is over 2.7% down to $893.15 i.e. nearly $22 down from yesterday’s closing.
What will happen to TSLA stock in the future, we can only guess. Even some prominent stock traders such as Peter Brandt prefer not to make predictions.
The weather here is simply delightful. High in the upper 70s. No way to ever know how high a parabolic move can go.
— Peter Brandt (@PeterLBrandt) February 19, 2020
Analysts Opinion about Tesla’s Stock Offering
Several analysts have acknowledged Tesla’s decision for capital raising at this time. Analysts say that it was the right thing for Tesla to do considering its expansion plans in Europe. Speaking to MarketWatch, Garrett Nelson, an analyst with CFRA said:
“We are not surprised by the capital raise considering (Tesla’s) ambitious growth plans, including a new factory in Germany and a possible factory in Texas. Recent speed bumps including a coronavirus-related delay in vehicle deliveries from its new China factory and the Model X recall likely factored into management’s decision to proceed with the offering.”
Tesla (TSLA) stock has been on a massive bull-run with its price doubling since the start of 2020. The stock has been repeatedly making new highs for this month. Baird analyst Ben Kallo said that considering this massive run-up in the stock price, raising equity was a good decision. Kallo also added that Tesla’s future investment plans will include $3 billion of annual capital expenditures up to 2022.
However, Kallo has rated the TSLA stock as neutral with a $650 price target.
“The size of this offering is larger than many had anticipated, but we believe it’s a smart move by Musk and the Board to take advantage of being back in a position of strength with the Street and focus on raising capital,” said another analyst Dan Ives.