"We have long wanted Tesla to raise a large amount of cash via stock issuance due to its lofty valuation and then perhaps never need to raise capital again".
Tesla on Thursday - in an about-face - announced plans to raise $2 billion in a stock offering to take advantage of an astronomical jump in its share price. But Elon Musk probably isn't losing any sleep over the matter, as the price per share was still more than double any of the company's prior equity raises. "So in light of that, it doesn't make sense to raise money because we expect to generate cash despite this growth level".
The sale arrives as almost 50 percent of analysts have a "sell" rating on the stock after a stunning rally has more than doubled Tesla's share price in a little more than a month. Musk, 48, and fellow billionaire Larry Ellison, a member of the company's board, have vowed to personally purchase US$10 million and US$1 million of shares, respectively.
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Tesla said he will use the funds to strengthen his balance sheet and for general corporate purposes.
Tesla's shares fell as much as 7% in premarket trading after having tripled since October when the company posted a rare quarterly profit.
It comes, however, as the company's stock has unexpectedly skyrocketed over the past year - its value more than doubling since February 2019 and especially made aggressive gains over the past few months.
"Musk also said Tesla had no acquisition targets so it is possible that has abruptly changed, but we think he wants to capitalize on the stock's recent upward explosion and we can't blame him".