Tesla Stock Shrugs Off The Latest Equity Offering

She tweeted that the Tesla stock offering increases their confidence that the company will gain share in the EV market over the next five years. She also said it increases “the probability that our bull case for the stock is correct.”

How many shares will the Tesla stock offering include?

The Tesla stock offering will increase the number of shares, which means dilution for current shareholders. Analyst Ben Kallo of Baird estimates the share dilution at about 2% for current shareholders. Thus, the shares tumbled right after the equity offering was announced, but even more share dilution couldn’t dissuade investors from buying more on the pullback.

Although Tesla supposedly wasn’t planning another capital raise any time soon, some have noted that the company’s market capitalization has increased 200% since October. This increase means it could make sense for the automaker to tap into the significant gain in its share price.

Musk will participate in the Tesla stock offering by purchasing up to $10 million of the new shares. Oracle CEO Larry Ellison, who serves on the company’s board of directors, will participate by purchasing up to $1 million of the new shares.

The new shares in the stock offering are scheduled to begin trading tomorrow. Morgan Stanley and Goldman Sachs are underwriting the offering and have an option to buy another $300 million worth of the new shares within 30 days, brining the total expected amount of the capital raise to $2.3 billion.

The filing released today also included a statement that the Securities and Exchange Commission has finished its probe of statements Musk made in 2018 about taking Tesla private. The agency has also finished its investigation into his previous estimates of production rates for the Model 3.

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