Feb 14, 2020 - Economy & Business

Tesla raises more than $2 billion in secondary stock offering

Photo Illustration: Sarah Grillo/Axios. Photo: Jörg Carstensen/picture alliance via Getty Images

Tesla raised $2.03 billion in a secondary stock offering, pricing at $767 per share. That's a 4.6% discount to yesterday's closing price, and an 86.2% premium to where CEO Elon Musk infamously tweeted that he had "funding secured."

Why it matters: Momentum floats apparently are a thing now, as this comes just two weeks after Musk said on an earnings call that "it doesn’t make sense to raise money because we expect to generate cash."

The backdrop: This time last year, Tesla was struggling with cashflow issues and suffering waves of layoffs. And, investors weren't particularly happy with its reluctance to spend money.

  • Tesla bulls (who, after all, represent the overwhelming majority of the company's only shareholders) saw a fast-growing technology company investing heavily in new automobiles, factories and batteries. In other words, they saw a company with significant opportunities to turn fresh cash into future profits, and they wanted CEO Elon Musk to grasp those opportunities.
  • The bull case for Tesla is explicitly predicated on the company raising billions of dollars in fresh equity capital.

The bottom line: "Tesla stock has been in Ludicrous Mode. Given its bonkers gyrations, it's now easy to see why Musk might feel that he was right all along in wanting to take the company private back in 2018, writes Axios' Felix Salmon.

  • The recent surge in Tesla's share price can be viewed as the stock market positively begging Musk to raise fresh cash while it's incredibly cheap. While he claims not to need the money, investors are sure that he'll find something worthwhile to do with it.

Go deeper

Tesla weighs Nashville for new vehicle factory

Photo: Brendan Smialowski/AFP via Getty Images

Tesla CEO Elon Musk said he's "scouting" central U.S. locations for a factory that would build the upcoming Cybertruck, as well as the Model Y crossover for deliveries on the East Coast.

Why it matters: The announcements via Twitter Tuesday night add some clarity to expansion plans for the Silicon Valley electric automaker, which has recently found itself on better financial ground ahead of key product launches.

NTSB warns about lax oversight of new car tech

Illustration: Sarah Grillo/Axios

There's mounting evidence that people put too much trust in driver-assistance features like Tesla Autopilot, but federal regulators aren't doing enough to ensure the systems are deployed safely, experts say.

Why it matters: Nearly 37,000 Americans die each year in highway accidents. As automated features become more common, the roads could get more dangerous — not safer — if drivers use the technology in unintended ways.

Big Pharma is on a stock buyback spree

Data: Company filings; Chart: Axios Visuals

In 2018, the year the Republican tax law went into full effect, 12 of the largest pharmaceutical companies spent more money buying back their stock than they spent on drug research and development.

The big picture: When billions of dollars became available to the biggest drug companies, their main priority was to juice earnings, along with the paydays of their executives and investors — not investments in new treatments or relief for patients who can't afford their drugs.

Go deeperArrowMar 5, 2020 - Health