Tesla recalls 15,000 Model X SUVs for power steering issue

Andrew Cummings
February 14, 2020

After more than doubling in 2020, Tesla's stock has settled back down to a still-huge year-to-date share price rise of almost 88%.

Co-founder and CEO Elon Musk will add to his Tesla stake by buying up to $10 million in shares from the offering, for which Goldman Sachs and Morgan Stanley will serve as the lead joint book-running managers, Tesla said in a news release.

Musk, a billionaire entrepreneur who reached a regulatory settlement with the SEC in 2018, had brushed off questions as recently as late January about whether Tesla should take advantage of the higher stock prices to raise new capital and expand more rapidly.

Tesla Inc TSLA.O on Thursday announced plans to raise $2 billion (£1.54 billion) in a stock offering, tapping into an astronomical jump in its share price over the past few months and reversing the electric-car maker's often-stated policy of avoiding sales of new stock.

Just last month, Musk said quote: "it doesn't make sense to raise money". The underwriters have been granted an overallotment option of up to 397,500 shares.

The Securities and Exchange Commission has issued a subpoena for "information concerning certain financial data and contracts including Tesla's regular financing arrangements", the electric vehicle company revealed in documents released on Thursday. Board member and Oracle cofounder Larry Ellison will purchase $1m in Tesla shares.

Tesla Inc CEO Elon Musk walks next to a screen showing an image of Tesla Model 3 auto during an opening ceremony for Tesla China-made Model Y program in Shanghai, China Jan. 7, 2020.

"The stock initially traded down because 1) issuing new shares dilutes current owners and earnings (in this case by ~1.9%), and 2) it sends a signal that management believes the stock is fairly (or richly) valued", Munster wrote in a blog post.

The company said it plans to use proceeds from the offering to strengthen its balance sheet and for general corporate purposes.

As of Tuesday's close, the company's market value stood at $139.6 billion, making it the second most valuable automaker in the world behind Toyota.

Some shareholders are understandably upset with Tesla's decision to issue more shares.

Winklevoss took the opportunity to pump Bitcoin. In fact, in mid-afternoon trading the stock is up 5%, or $38.75 to $806.04.

Lying CEO or not, investors still have faith in Tesla.

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