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Tesla plans $2b stock offering

February 14, 2020 00:00:00

The US electric carmaker Tesla plans a $2 billion common stock offering, an announcement coming just two weeks after CEO Elon Musk said the automaker would not take advantage of its surging stock price to raise more capital, reports CNBC.

Shares of Tesla fell as much as 6.0 per cent in premarket trading and opened lower following the announcement. But the stock reversed those losses in early trading, as analysts and investors cheered the move as a way to shore up its balance sheet and possibly further its expansion plans.

Musk himself will buy as much as $10 million of stock in the offering, while Tesla board member Larry Ellison will purchase up to $1 million. The company will offer 2.65 million Tesla shares through underwriters Goldman Sachs and Morgan Stanley, with expected gross proceeds of $2.3 billion before discounts and expenses.

Tesla said it plans to use the proceeds "to further strengthen its balance sheet, as well as for general corporate purposes."

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