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Tesla to raise money after painful 1Q, and Musk is buying in

PALO ALTO: A week after revealing a huge first quarter loss and the need to raise cash, Tesla is doing just that with CEO Elon Musk buying $10 million in new shares being offered as part of a stock and debt offering that could raise more than $2 billion.

Tesla said on Thursday that it’s offering $650 million of common stock and $1.35 billion in convertible senior notes due in 2024 in two separate offerings. The company is giving the underwriters a 30-day option to purchase up to an additional 15% of each offering.

That would add up to about $2.3 billion before discounts and expenses and if the underwriters fully exercise their options.

Last week, Tesla reported its cash balance at the end of the first quarter shrunk by $1.5 billion since December, to $2.2 billion. Musk said during a conference call that Tesla might need to raise capital again.

The Palo Alto, California company lost $702.1 million in the first quarter, among its worst quarters in two years. Sales tumbled 31% in the period. Musk predicted another loss in the second quarter but said Tesla would be profitable again by the third quarter.

The surprisingly large loss followed the company’s first back to back quarters of profitability.

Tesla has lost more than $6 billion since setting out to revolutionize the auto industry. Musk expects that future profits will be driven by rising sales and the arrival of autonomous vehicles dedicated to a new ride-hailing service.

Shares of Tesla Inc. jumped nearly 4 per cent at the opening bell.

News credit : Indiatimes