Tesla Inc. surprised the market with the news that it’s planning to offer about $2 billion of common stock in an underwritten deal, but an initial negative reaction gave way to hopes it’s the right step considering the recent runup for the stock and the Silic1`on Valley car maker’s expansion goals.
Tesla stock TSLA was down as much as -4.2% in early trading it fell as much as -7.2% in premarket trading before recovering to trade nearly 5% higher as the closing bell approached.
Chief Executive Elon Musk will participate in the offering by purchasing up to $10 million in new shares, Tesla TSLA said in a statement. Board member Larry Ellison will also participate by buying up to $1 million in stock.
Proceeds of the deal will be used to bolster the company’s balance sheet and for general corporate purposes. Goldman Sachs and Morgan Stanley are underwriting the deal and have a 30-day option to acquire another $300 million in stock.
Tesla shares have gained 151% in the last 12 months, compared with advances of 22% and 15% for the S&P 500 SPX, -0.16% and the Dow Jones Industrial Average. DJIA, -0.43%
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source: market watch