The new offering is a surprise as Musk recently said the company didn't need to raise funds.
. Funds from the offering will come in handy as Tesla said in its annual 10-K filing also released today that it’s budgeting up to $3.5 billion this year for capital investments for a range of projects, including factory construction and upgrades to new products including the Cybertruck pickup and Semi.
During the company’s Jan. 29 earnings call with analysts, Musk said rising cash generation could support capital investment as a reason raising new capital wasn’t necessary in the the near term. “It doesn't make sense to raise money because we expect to generate cash despite this growth level,” he said.Ben Kallo, an equity analyst with Baird who rates Tesla “Neutral,” said in a research note that the offering is “prudent given current share prices.
“We believe TSLA’s decision to raise capital was smart; in fact we think investors will argue the offering should have been larger,” Kallo said. “That said, we do note management indicated on the Q4 call that it ‘doesn’t make sense’ to raise money given upcoming cash generation, so the announcement was somewhat surprising.”
Goldman Sachs and Morgan Stanley are lead managers for the offering, with Barclays, BofA Securities, Citigroup, Credit Suisse, Deutsche Bank and Wells Fargo Securities and Societe Generale also participating.
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