When first announced, shares in the company fell briefly but quickly rose once details of the plan became known.
Musk repeated several times a year ago that Tesla does not need any additional capital. An infusion of that amount would get Tesla closer to a ratio of 15 percent of cash to sales, a historical level among traditional auto manufacturers and suppliers, according to Bloomberg Intelligence analyst Joel Levington. The company reported losses per share of roughly double what analysts predicted, and the company burned through $700 million in cash between January and April.
Tesla ended its first quarter with $2.2 billion in cash. The company has plans for new models that include a large truck, the Semi, and an SUV, the Model Y. Tesla is also developing facilities in China.
The company said in a filing that it had increased its offer to 3.1 million shares, rising to 3.5 million including a tranche for underwriting banks, from an initially planned 2.7 million, priced at $243 per share. Morgan Stanley had forecasted a $2.5-billion raise in the third quarter, and Bank of America and JPMorgan predicted an impending offering.
The conversion premium at which the bonds can be exchanged for stock in the future, was also at the bottom of the initial range given by the company - another concession.
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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.
Tesla had said on Thursday it would raise up to $2.3 billion in new capital through shares and debt. If the green-shoe options are exercised, then Tesla's total capital raised would be approximately $2.3 billion, before discounts and expenses.
Tesla is aiming to sell stock worth $642 million at Tesla's current share price.
The lending was disclosed in a Tesla prospectus for the fundraising, and showed the debt to be $117m less than the personal loans Musk disclosed in a similar 2017 prospectus.
As Tesla Inc continues to burn through its cash reserves, the electric automaker is under pressure from Wall Street to raise funds and that's exactly what it is doing.