Tesla wants to raise $500 million from new common stock in the months before opening the world’s largest lithium-ion battery factory, according to an investor filing posted Thursday.
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The electric-car company will issue 2.1 million new shares as it enters a critical and risk-filled phase of growth that includes transitioning to a full-line automaker with the Model X (expected this September) and Model 3 (late 2017), as well as entering the energy-storage business with the $5-billion Gigafactory battery plant under construction in Nevada. Elon Musk—who currently owns 27 percent of the company—has pledged to buy four percent of the new shares, or about $20 million. Musk is using his stock purchase as collateral for two personal loans totaling $475 million from Goldman Sachs and Morgan Stanley, who will also receive a discount and option to purchase another $74 million worth of Tesla stock. The actual proceeds, which could be more or less than $500 million, depend entirely on the stock price whenever Tesla decides to execute the sale.
-The automaker ended the second quarter with $184 million in losses, triple the amount from last year, a number it attributes to big spending on dealerships, Supercharger stations, production retooling for the Model X crossover, and the lithium-ion-battery backup generators it wants to sell to homeowners and businesses. While Tesla has raised more than $4 billion since 2013 (the only year Tesla turned a quarterly profit), the company only reported about $1.2 billion in cash on hand and has lost a total of $1.8 billion since its July 2010 public offering.
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Still, Tesla investors have consistently rewarded the company with a market capitalization of $30 billion, or more than half those of Ford and General Motors, and willingly ridden a stock-price rollercoaster that can be as volatile as those of oil companies. In the past 52 weeks, the stock has wavered from $181 to $291 and now sits at $241. If Tesla can really hit 500,000 car sales per year by 2020—not to mention slash battery prices and sell cars in all 50 states—there could be a big return for Tesla investors. But only time will tell.
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