Tesla Raises $2.35 Billion in Boosted Debt, Stock Offerings

A 2018 Tesla Model 3 electric vehicle is shown in Cardiff California

A 2018 Tesla Model 3 electric vehicle is shown in Cardiff California

Tesla chief executive Elon Musk personally owes $507 million (R7.4 billion) to Wall Street banks involved in Tesla's stock and debt sale, backed by his stake in the electric vehicle maker, a company filing showed on Thursday.

The electric auto maker raised $750 million selling common stock and $1.6 billion from convertible bonds, up from originally offering $650 million and $1.35 billion.

With a current market cap around $44 billion, Tesla's stock value would need to jump by a factory of more than 10 to achieve Musk's goal. Tesla had previously planned to offer 2.72 million shares and $1.35 billion worth of convertible notes. Now, Elon Musk's company is selling 3.1 million shares valued at $243 per share, according to CNBC.

Including the option for underwriters to buy 15 per cent in each offering, Tesla will sell about $860m in new shares and $1.84bn in debt.

Musk likely raised his own stake to show shareholders that he's putting more of his own money into the company and taking the same risk that he's asking investors to, said Gartner analyst Michael Ramsey.

Osborne said he believed Tesla's upcoming capital raise was "badly needed" but too small to cover future costs.

Tesla said the prices for these iterations of the Model 3 include a United Kingdom government-funded plug-in auto grant of £3,500 ($4,600). Canaccord Genuity upgraded shares of Tesla from a "hold" rating to a "buy" rating and increased their target price for the stock from $330.00 to $450.00 in a report on Monday, February 11th. Jefferies Financial Group reaffirmed a "buy" rating and set a $450.00 price objective on shares of Tesla in a research note on Wednesday, March 27th. Tesla now has an average rating of Hold and an average price target of $305.24. If they don't hit that price, Tesla is on the hook to repay the notes largely in cash, according to the filings. That is six notches below investment grade. "We expect that it will be a major challenge for Tesla to aggressively increase production/deliveries, shift the product mix toward the $42,000 price level, and simultaneously lower costs enough to achieve the 25 per cent gross margin target". Tesla hired Goldman Sachs Group Inc., Citigroup Inc., Bank of America Corp., Deutsche Bank AG, Morgan Stanley, Credit Suisse Group AG, Societe Generale SA and Wells Fargo & Co.to underwrite the share offering. "Essentially all of the technologies incorporated in Tesla vehicles (or some similarly effective alternative technologies) will largely be available to competitors", according to Moody's. Alpha Windward LLC purchased a new stake in Tesla in the fourth quarter worth about $26,000. Sales tumbled 31% in the period.

Say what you will about Tesla's underlying business model or Elon Musk's various antics, there's simply no denying that Tesla vehicles are some of the safest cars on the planet.

The surprisingly large loss followed the company's first back to back quarters of profitability.

Shares of Tesla Inc. rose almost five per cent in midday trading Friday to $255.60.