Tesla shares drop after automaker announces $2 billion stock sale

Tesla’s share price hit the brakes Thursday after the electric-car maker said it plans to sell about $2 billion in additional stock.

Tesla shares had dropped 3.3 percent in premarket trading to $741.80 as of 9:09 a.m. after the Silicon Valley-based company announced the new common stock sale. Tesla said it will use proceeds from the offering “to further strengthen its balance sheet, as well as for general corporate purposes.”

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.

Larry Ellison, a Tesla board member and the co-founder of software giant Oracle, will buy as much as $1 million in shares, the automaker said. The offering’s underwriters will have a 30-day option to buy as much as $300 million in additional stock, according to the company.

The offering comes on the heels of a stunning stock rally that saw Tesla’s share price more than double in a little more than a month. The run has been fueled in part by Tesla’s stronger-than-expected earnings for the end of 2019 and a profit at the battery factory the company runs with Panasonic.

But the gains have been pared since last week as the coronavirus outbreak in China reportedly forced Tesla to delay some deliveries there. Tesla shares closed Wednesday at $767.29, up more than 80 percent from the start of the year but down from last week’s intraday high of $968.99.

Musk — who owns about 20 percent of Tesla — has added $13 billion to his net worth so far this year amid the rally, according to Bloomberg, which put his net worth at $40.5 billion as of Wednesday.

Source: Read Full Article