Tesla Announces $2 Billion Offering For Model 3 Ramp, Stock Loses Day's Gains

After gaining more than 3 percent, or $6.50 per share during the day, Tesla Motors Inc TSLA is falling in after-hours trading.

Tesla announced a $2 billion stock offering. The net proceeds from the offering are to be used to accelerate the ramp of its Model 3.

"The electric automaker is offering about $1.4 billion in shares," Reuters noted. "CEO Elon Musk will sell the remaining shares to "cover tax obligations associated with his concurrent exercise of more than 5.5 million stock options."

Cash proceeds will go to Federal and state government to satisfy 52 percent tax withholding on stock options exercise.

Related Link: 3 Big Risks In Goldman's Tesla Upgrade

Interestingly, Morgan Stanley and Goldman Sachs will act as lead joint underwriters for the offering. In a note out Wednesday morning, Goldman Sachs upgraded Tesla shares to Buy with a $250 price target. The firm expects upside of 22 percent in the next six months.

Goldman Sachs analyst Patrick Archambault said a 22 percent climb in share price is feasible following the recent selloff because "we do not believe Tesla shares are fully capturing the company's disruptive potential."

The stock traded recently at $204.24, down 3.2 percent in the after-hours session.