With it needing to almost constantly expand its automaking efforts, Tesla said Thursday it will seek to raise more than $2 billion through a combination of issuing new shares of stock and selling the electric carmaker's debt.
In a filing with the Securities and Exchange Commission, Tesla said it will sell $1.35 billion of debt, and $650 million worth of stock, and give underwriters the chance to buy up to $202.5 million more of the company's shares. The announcement of the fundraising comes a week after Tesla reported a quarterly loss of $700 million, and Chief Executive Elon Musk suggested that the company would seek to raise more funds on the capital markets.
And in addition to Tesla's own fundraising plan, Musk is putting his money where his mouth is. In a separate SEC filing, Tesla said Musk intends on spending $10 million to purchase 41,896 shares of the company's stock. Musk already owns approximately 20 percent of Tesla's outstanding shares.
"This was a smart move by Musk and Tesla to rip the Band-Aid off an go to the capital markets as the growing worries around capital was a black cloud over the (company's) stock," said Dav Ives, managing director at Wedbush Securities. "A capital raise was needed sooner rather than later."
Wall Street applauded Tesla's plans, as investors sent the company's shares up 2.2 percent, to $239.20 Thursday. For the year, Tesla's shares have fallen by 28 percent.
The new fundraising plan comes as Tesla is in the middle of some of its boldest efforts to expand its customer base and appeal to more middle-of-the road car buyers. The company recently rolled out a long-awaited version of its Model 3 sedan that starts at $35,000, and also showed off its upcoming Model Y crossover SUV, with plans to start deliveries of that vehicle in last 2020.
Tesla also needs to raise capital to help finance new facilities such as a factory in Shanghai, which Tesla has said will be eventually be capable of producing up to 500,000 vehicles a year.
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