Tesla Inc. on Thursday filed for a capital raise, disclosing its intent to sell both common stock and convertible notes. Shares were up 5.6% in active premarket trading.
The company plans to offer about 2.7 million shares of additional common stock, with Chief Executive Elon Musk expressing preliminary interest in purchasing up to 41,896 shares or $10 million, according to a filing with the Securities and Exchange Commission.
Based on the stock’s closing price of $238.69 on April 30, as noted in the filing, the stock offering could raise $650 million. The stock closed Wednesday at $234.01, the lowest closing price since Jan. 12, 2017.
also filed for a convertible-note offering of $1.35 billion, or $1.55 billion if Tesla’s underwriters fully exercise their options to buy additional notes. The company said in its filing that the closing of each of these two offerings were not contingent on each other.
Asked about the potential for a capital raise on Tesla’s earnings call last week, Musk said: “I don’t think raising capital should be a substitute for making the company operate more effectively.” He continued that he saw “some merit to raising capital” but such a decision would depend on “the right timing.”
Bernstein analyst Toni Sacconaghi had commented after the earnings call that Tesla appeared to be “unnecessarily walking a perilously fine line between trying to grow and trying to be self-funding.”
Tesla Chief Financial Officer Zachary Kirkhorn said on the company’s call that Tesla will “be comfortable returning to a place of profitability” in the third quarter once it makes progress on “improving the cost efficiency of the business without sacrificing growth.”
Tesla shares have dropped 30% so far this year, while the S&P 500
has risen 17%.