Tesla fundraising skyrockets above $2 billion target

Author: Ruban
Sector: Autos
Industry: Consumer Cyclical


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Earlier this week Tesla reported that it has planned to raise at least $2 billion by selling a mix of debt and equity worth at least $2 billion.

In a Friday filing, Tesla said it had raised $2.34 billion in an underwriting deal spearheaded by Goldman Sachs. Tesla sold shares worth $737 million and convertible notes worth $1.6 billion. Underwriters will have the option to buy an additional $350 million in stock and debt over the next month. Elon Musk brought $10 million worth of newly issued shares.

The new convertible notes come with a strike price of $309.83, 27 percent above the $243 official sale price. Shares rose to $253 in Friday trading, so investors who bought the new shares are already in the black.

The company reported an operating loss of $522 million and GAAP net loss of $702 million in Q1 2019.

Tesla had about $2.2 billion in cash in the bank at the end of March 2019, which is $1.5 billion reductions from the end of 2018, so the sale roughly doubles Tesla's cash cushion. The extra cash will be useful as Tesla prepares for the next phase of its growth. Tesla is aiming to begin production of the Model Y SUV, the Tesla Semi, and a new edition of the iconic Roadster—all before the end of 2020.

The company reaffirmed its prior guidance of 360K to 400K vehicle delivers in 2019 which represents approximately 45% to 65% increase compared to 2018. The company also stated that if their Shanghai Gigafacotry is able to reach volume production in early Q4 this year, they may able to produce as many as 500K vehicles globally in 2019. The company believes it will deliver between 90,000 and 100,000 vehicles in Q2 2019.


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