Wall Street darling Tesla just raised $600 million and the share price moved up.
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CEO Elon Musk will once again buy common stock that his company will offer.
Shares of the company are climbing in early morning trading after it detailed in a regulatory filing an offering it expects to generate about $642 million in proceeds after expenses.
“I don’t think that there’s not a need to raise equity capital”, Musk said.
That figure excludes an option for the offering’s underwriters to purchase shares. He views Musk’s intention to purchase shares and Tesla’s plan to use the money for future growth as positives. This time Musk will buy $20 million worth of the common stock. The company is also ramping up production at its Fremont factory for the delivery initiation of its long-awaited sports utility vehicle (SUV), Model X. Apart from these major initiatives, Tesla is rapidly expanding its stores and charging station networks domestically and in overseas markets, such as Australia, China, and the UK.
All that doesn’t come cheap. Company’s cash reserves stand only at $1.15 billion, compared to $1.9 billion at the start of this year.
In the second quarter, the company made its first attempt to raise capital by acquiring revolving credit facility of $500-750 million.
Tesla, which was founded in 2003, has never made an annual profit under U.S. accounting standards.
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Tesla’s Model 3 vehicle, which will compete with BMW’s 3 Series sedans, is expected to go on sale in 2017.
