Tesla Motors (NASDAQ:TSLA) decided to increase the size of its common stock offering to the public to raise as much as $750 million based on its new regulatory filing with the Securities and Exchange Commission (SEC).
The electric car manufacturer recently announced its intention to offer additional shares of its common stock worth $500 million.
Based on the filing, Tesla Motors plans to sell 3,099,173 shares at an offering price of $242 each. The maximum aggregate offering price would be $749,999,866.
Elon Musk, Chairman and CEO of Tesla Motors indicated its preliminary interest to buy 82,645 shares worth approximately $20 million.
Tesla Motors also indicated that its underwriters have the option to purchase up to additional 404,239 shares from the company (at the offering price less the underwriting discount) if they sell more than 2,694,934 shares. The underwriting discount is $3.5890.
Akshay Anand, an analyst at Kelly Blue Book told the Mercury News, “The increase in the offering shows what a challenge it is to produce and sell vehicles in a global market.”
The analyst added, “The offering makes sense. Tesla is increasing revenue significantly, but they also are spending quite a bit of cash, doubling and tripling their cash burn.”
Tesla to uses net proceeds from the offering to expand business
Tesla Motors estimated that its net proceeds from the stock offering will be approximately $641.9 million after deducting underwriting discounts & commission as well as estimated expenses related to the offering.
The company’s net proceeds will be around $738.3 million if the underwriters exercise their option to buy additional shares in full.
According to Tesla Motors, it would use the net proceeds from the offering to expand its business in the United States and internationally. The electric car manufacturers plans to boost its stores, service centers, Supercharger network, Tesla Energy business, Gigafactory, and development and production of the Model 3. The company would also use the net proceeds for other general corporate purposes.
Model 3 expected to ramp up sales for Tesla
Commenting on the Model 3, Anand said, “The Model 3 is the one that will be doing the heavy lifting for Tesla. That’s the vehicle that will really ramp up their sales.”
He added that the primary question is whether the electric car manufacturer will be able to meet is 2017 target for the launching of the Model 3. He said, “It’s a very lofty goal, and they will have to knock everything out of the park to do it.”
