The electric-car maker said it will now raise $2.7 billion, through the sale of 3.1 million shares of its stock and the issuing of $1.6 billion worth of convertible notes. On Thursday, Tesla said it would sell up to 2.72 millions shares. CEO Elon Musk also raised the the amount he would personally invest in the offering from $10 million to $25 million.
The original capital raise sent Tesla shares up 4.3% on Thursday as investors responded positively to the news. Yet some on Wall Street were left wanting a bit more.
“A clear, albeit short term positive for 2 reasons: 1) it alleviates the very pressing issue of shoring up Tesla’s balance sheet for the near future, and 2) it eliminates the fringe “can’t raise due to SEC investigation” camp (we’re not sure how large that camp was to begin with),” Evercore ISI’s Arndt Ellinghorst wrote following Thursday’s announcement.
“We would have preferred a larger raise, but ultimately, we’re more concerned around the sustainability of demand and what effect TSLA pricing actions to support that demand may have on margins given aging product, production (battery) concerns, and an increasingly competitive landscape.”
Ellinghorst got his wish on Friday morning, and Wall Street responded positively to the upsized offering, sending shares up another 4.7% to $255.61 apiece.
The two-day run has catapulated Tesla’s stock back above key support at $250 after finishing at a more than two-year low of $234.01 earlier in the week.
“Maybe Mr. Musk can pull a rabbit out of a hat once again… but there’s no question that the stock is sitting at a very important technical level,” Matt Maley, an equity strategist at the firm Miller Tabak, wrote in a note to clients out last week.