If the offering is completed, the number of Tesla shares outstanding will total 183.71 million (or 184.11 million if the underwriters exercise their optional shares) valuing the company at almost $141 billion. At Tuesday's closing price of $767.29 per share, the offering is valued at $2.03 billion. Its market capitalisation is now worth more than the value of General Motors Co and Ford Motor Co combined.
"Diluting the company to pay down debt doesn't sound like a wise move", Musk said on the same call.
Tesla bulls, like Musk and Ellison, see the huge increase in the share price as a flawless time to offer more equity in the company.
Tesla is also working on an electric pickup truck, a new generation of the Tesla Roadster, an electric sports vehicle, and automated driving features. Its profit and revenue in the last three months of 2019 topped estimates and the company said 2020 deliveries should comfortably beat projections amid demand from new customers.
Tesla Model X steering wheel. | Image Tesla
"Despite this comment, we believe this is the correct thing for TSLA to do taking advantage of the recent surge in the stock price".
The company said it plans to use the net proceeds "to further strengthen its balance sheet, as well as for general corporate purposes".
Tesla raised about $2.3 billion in May to start production in China and spend on developing new models, including the high-volume Model Y SUV and a Semi commercial truck, whose launch has been delayed due to a lack of battery production capacity. Tesla reported US$1.33 billion of expenditures for all of a year ago, well below its initial plan for as much as US$2.5 billion.
Co-founder and CEO Elon Musk will add to his Tesla stake by buying up to $10 million in shares from the offering, for which Goldman Sachs and Morgan Stanley will serve as the lead joint book-running managers, Tesla said in a news release.
The underwriters of the offering will also have a 30-day option to buy up to approximately $300m of additional common stock.