Following its stock offering announcement yesterday, Tesla has announced the price at which the shares are going to be sold and it’s a significant discount over the current stock price. Yet, shareholders don’t seem to care.
Tesla’s stock is slightly up and trading at $810 at the time of writing.
Yesterday, Tesla announced a new stock offering of 2.65 million to 3 million shares, which would help Tesla raise over $2 billion.
At first, the market reacted badly to the announcement, especially since CEO Elon Musk said a few weeks prior that “it doesn’t make sense” to raise more money, but that was before the stock surged to over $700 per share.
Tesla’s stock recovered during the day, but it fell in aftermarket trading after Tesla announced that the offering is going to be priced at $767.00 per share:
The stock fell closer to this level as it expresses Tesla’s belief that investors will be willing to invest $2 billion in Tesla stock at that level.
Yet, Tesla’s stock bounced right back to over $800 per share after the markets opened.
As we reported yesterday, Tesla said that it planned to use the proceeds from the capital raise to “strengthen its balance sheet” and CEO Elon Musk, as well as billionaire board member Larry Ellison, both said that they plan to participate in the offering.
Good move from Elon and Ellison. If Tesla’s stock maintains these levels, they are getting some nice discounted stocks.
If anything, it shows that Tesla has a very strong shareholders base who believe strongly in the stock.
Personally, I remain bullish on Tesla long-term, but I think this quarter might be hard on the company, especially with its Chinese operations.
However, I am not sure that it’s worth selling now and waiting for a better buying opportunity at the end of the quarter because I also expect some significant news regarding Tesla entering the battery business in the near future.
I think shareholders should brace themselves for a wild ride with Tesla stock again.
Disclosure: I am long TSLA.
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