Yesterday, Tesla Motors announced it would sell 2.1 million additional shares of common stock in an attempt to raise $500 million, with the expectation that those shares would be priced at the Wednesday close of $238.17. Today, we learn that the price will actually be $242 and that Tesla will actually offer 2.7 million shares. That means that instead of $500 million, the overall funds raised should be closer to about $642 million.
Shares of the company are climbing in early morning trading after it detailed in a regulatory filing an offering it expects to generate about $642 million in proceeds after expenses. Shares of Tesla were up $1.99 to $244.50 in premarket trading today.
The nearly 2.7 million shares that Tesla Motors Inc. will offer could grow to more than 3 million if underwriters exercise their option to buy more shares. Tesla CEO Elon Musk said yesterday he plans to buy $20 million worth of stock, and that remains true today.
The Palo Alto, CA, automaker says it needs the cash in part to help with development of its Model 3, a lower-cost electric car due out in 2017. Tesla will also use some of the money to work on the $5-billion battery Gigafactory in Nevada. Tesla’s highly anticipated third vehicle, the Model X SUV, will go on sale in September. S&P Capital IQ analyst Efraim Levy told Reuters that this new stock offering, “combined with existing credit lines, will provide the company with more than enough cash for operational purposes into 2016.”
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The AP contributed to this report.