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Tesla Sell Shares to Raise $500 Million, Accelerate Growth in US and Abroad

Aug 14, 2015 10:14 AM EDT | By Jean-Claude Arnobit
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Tesla Motors
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Tesla Motors, Inc. has just announced that it intends to offer $500 million worth of additional shares of common stock in an underwritten registered public offering, according to a press release issued by Tesla.

The company intends to use the funds from the offering to accelerate the growth of its business in the U.S. and abroad.

Tesla plans to grow its stores, service centers, Supercharger network, and its Tesla Energy business, according to the press release.

Aside from growth, the company will also be using the funds to develop some of its projects.

Tesla also plans to use the proceeds for the development and production of the Model 3, and the development of the Tesla Gigafactory, according to the press release.

Dan Dolev, an analyst at Jefferies LLC, told Bloomberg that this is a good sign.

"They are raising capital to fund growth, which is a good thing," he said.

Bloomberg added that proceeds from the offering will also give Tesla some cash cushion as it faces huge capital expenditures to expand globally and triple its vehicle production.

However, Andrea James, an analyst at Dougherty & Co., believes that Tesla is not yet done raising capital.

"It's just $500 million, and they'll need more to bring the Model 3 to market," he told Bloomberg. "Clearly they are not done raising capital."

He did add that Tesla's move will get the company through to "free cash-flow positive."

To show a vote of confidence, Elon Musk, CEO of Tesla, will be purchasing the company's stock.

Musk is intending to invest $20 million of common stock in the offering at the public offering price, according to the press release.

Tesla is also planning to grant the underwriters an option to purchase the company's stock.

The underwriters will have a 30-day option to purchase up to $75 million of additional shares of common stock, according to the press release.

The Underwriters for Tesla's offerings are the Goldman Sachs Group, Inc., Morgan Stanley, J.P. Morgan, Deutsche Bank Securities, Bank of America Corp., Merrill Lynch, and Wells Fargo Securities.

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