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Tesla (TSLA) to Issue Shares to Finance Production Ramp Up

Tesla Motors, Inc. TSLA announced a public offering of shares to finance the accelerated production plan for Model 3 as well as its plans to ramp up annual production volume to 500,000 units by 2018, rather than 2020 as planned earlier. The company can also use part of the proceeds for working capital and other general corporate purposes.

Tesla is offering 6.8 million shares, which can be increased to almost 8.24 million if underwriters exercise their option to buy additional shares. This should result in net proceeds of $1.4 billion, after deducting the underwriting discounts and commissions, and estimated offering expenses. The net proceeds can increase to $1.7 billion, if underwriters exercise their option to buy additional shares.

CEO Elon Musk will also exercise his stock options to buy around 5.5 million shares. Of these, he will sell around 2.8 million shares to pay the taxes arising from exercising the options. Further, Musk will donate nearly 1.2 million shares owned by him to charity.

Following the completion of this offer, Tesla will have around 146.16 million shares outstanding, which may increase to 147.6 million if the underwriters exercise their option to buy additional shares.

Tesla also revealed that it has around 373,000 orders for the recently launched Model 3. This figure excludes about 8,000 orders that were cancelled by customers and 4,200 suspected duplicate orders cancelled by the company.

Tesla currently carries a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include Lear Corp. LEA, Superior Industries International, Inc. SUP and Oshkosh Corporation OSK. All the three stocks sport a Zacks Rank #1 (Strong Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
TESLA MOTORS (TSLA): Free Stock Analysis Report
 
SUPERIOR INDS (SUP): Free Stock Analysis Report
 
LEAR CORPORATN (LEA): Free Stock Analysis Report
 
OSHKOSH CORP (OSK): Free Stock Analysis Report
 
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