Tesla TSLA announced Thursday that it plans to sell $2 billion worth of new stock. The news came just a few weeks after CEO Elon Musk told investors that a capital raise wasn’t necessary.
Tesla impressed Wall Street with solid fourth quarter and full-year fiscal 2019 financial results on January 29. The electric car maker’s 2019 revenue jumped 15% to $24.58 billion. On top of that, TSLA’s cash position climbed over $900 million in Q4 to more than $6 billion.
Tesla has also said it would deliver at least 500,000 vehicles in 2020, up 35% from last year. And our current Zacks estimates call for Tesla’s fiscal 2020 revenue to jump 30% higher, with 2021 set to climb another 32% to reach $42.06 billion.
Musk is set to buy up to $10 million worth of new Tesla stock. On top of that, Oracle co-founder and TSLA board member Larry Ellison is expected to purchase up to $1 million of the stock. Yet, on the firm’s Q4 conference, call Tesla’s CEO said “it doesn't make sense to raise money because we expect to generate cash despite this growth level.”
But Musk is on a mission to expand Tesla’s vehicle offerings and its global reach, from Europe to China. And Tesla’s costs can be unpredictable at times, especially as production ramps up. This is likely why Tesla plans to raise $2 billion through a new stock offering.
Meanwhile, the coronavirus in China could also impact Tesla’s near-term growth in a key new market. Plus, the electric car maker faces new SEC scrutiny over some of its financing and accounting practices.
Despite Thursday’s news, TSLA stock surged 5%. Tesla shares have now soared over 90% in 2020 and 270% in the last six months to blow away high-flyers such as Apple AAPL and Nvidia NVDA.
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