Tesla’s ongoing expansion led them to sell $500 million worth of shares, and CEO Elon Musk is buying $20 million worth himself.
It was announced last Thursday that Tesla motors is in need of additional funds. Therefore, they are offering to sell some stocks for their expansion. The decision doesn’t come as much of a surprise since they have been burning their funds at a very fast rate.
Upon the news, Musk reinforced his commitment to being a major stockholder of the company. While in Germany in 2013, Mr. Musk made it clear that he will be the last one who will sell stocks in the company and that promise has been kept. Only a handful of CEOs made such a promise, and it is really exceptional.
Musk owns 27% of Tesla’s shares; the company is worth $30 billion.This is not the first time that the CEO bought stocks in Tesla. About 2 years ago, he purchased shares worth $100 million to raise funds through common stocks.
So, what are the additional funds for?
The offering is to accelerate the growth of the company internationally as well as in the United States. This includes general corporate purposes, Tesla Giga factory development, Supercharger network, production of Model 3 and its development, service centers, and growth of its stores.
Earlier this year, the company made arrangements with 5 banks to raise a $500 million credit line that can be extended to another $250 million. Tesla Company, Inc. is hoping for a positive cash flow from the sales of the Model X.
Although the news may be shocking, the company has proven for years that it is more than capable of handling any situation involving investors. They have proven that gross profits and sales have doubled; vehicles had a 40% increase in sales last year and now have further increased to 50%.