The electric car
maker Tesla stock fell today following the popular company’s announced that it is
preparing a $2 billion public stock offering.
The news arrived
14-days after Elon Musk, the CEO of Tesla announced that the company would not use
its stock rising momentum price to secure more resources.
The CEO will
purchase approximately $10 million of shares in the offering, while Larry
Ellison a company's board member will buy up to $1 million in shares. Tesla
will allow 2.65 million shares to be available through Morgan Stanley and
Goldman Sachs with anticipated gross profits of $2.3 billion before expenses.
The company announced
that it plans to continue this practice “to further strengthen its balance
sheet, as well as for general corporate purposes.”
Dan Ives a Wedbush
analyst applauded the statement, saying to CNBC that it will be very
challenging for Tesla skeptics to make a case against them Ives stated.
“It’s a smart,
strategic move. It takes any doomsday scenario around cash crunch ... off the
shares began trading by falling more than 2.0% from its previous trading session
end of $767.28. However, the popular stock is still considerably up from where
it was last December. The company's stock has risen more than 115% and more
than 220% in the past 90 and 180 days respectively. Investors had estimated
that Tesla may use the recent bullish momentum as an opportunity to accumulate
funds by exchanging more shares to the public. The unexpected rise in the stock
also increased anxieties that it had become a risky stock to hold.
Two weeks ago
Tesla's CEO Elon Musk announced that the company did not intend to ask any more
money because it was “spending money, I think, efficiently, and we are not
artificially limiting our progress.”
“It doesn’t make
sense to raise money because we expect to generate cash despite this growth
level,” Musk said.