Tesla (TSLA) raised another round of capital this morning.
The ‘vertically integrated clean energy company' priced $850 million in 2.375% Convertible Senior Notes due 2022 and $350 million in common stock at $262/share.
Tesla originally planned on selling $750 million in convertible notes and $250 million in equity. That initial offering size seemed to be towards the low end of expectations.
On the fourth quarter earnings call in February, Elon Musk said that Tesla could get through the Model 3 release without raising capital, but it would be prudent to do so.
So, everyone knew this was coming, and investors are happy to get this out of the way.
The market has consistently demonstrated its tolerance of Tesla tapping the markets for more cash. To be clear, TSLA is the only stock that goes UP after announcing and pricing a secondary equity offering -- that does in fact dilute its shareholders.
Elon Musk purchased $25 million worth of the stock as a vote of confidence.
This is the third capital raise for Tesla since August of 2015... and it seems like it won't be the last. Tesla is still far from generating cash or profits on its own, but investors are more focused on the big picture opportunity in front of Tesla.
Tesla is already dominate the electric vehicle market and now they are trying to go mainstream. The mass market Model 3 is set to hit the market later this year but deliveries won't start in earnest until 2018.
All the other automakers are entering the EV market soon, but they don't have a few hundred thousand reservations lined up.
Tesla will continue to be a controversial/battleground stock with a high short interest. The Bulls are the winner thus far, with the stock less than 10% from its all-time high.