Tesla Inc. TSLA shares are trading lower after the company issued a 10-K filing indicating the SEC has issued a subpoena seeking info related to financial data. Separately, the company reported a $2 billion common stock offering.
CEO Elon Musk will participate by purchasing up to $10 million of common stock in this offering. Oracle ORCL founder Larry Ellison, who is a member of Tesla's board of directors, will purchase up to $1 million of common stock.
The aggregate gross proceeds of the offering will be $2.3 billion before discounts and expenses. Tesla says it will use the net proceeds from the offering to strengthen its balance sheet, as well as for general corporate purposes.
On Feb. 5, Cascend Securities' Chief Investment Strategist Eric Ross said Tesla's "renewed access to equity capital could reduce their debt load significantly." The strategist believes paying off debt via an equity capital raise could be accretive to the company's calendar year 2021 earnings by about $1 per share.
"With $13.5 billion in debt, a $20 billion raise would dilute valuation by roughly 13.5%," Ross suggested. He said an offering would help remove risk from the company's model and also leave Tesla open to future debt financing with a clean balance sheet.
Tesla's stock traded down 4.5% to $732.46 per share in Thursday’s pre-market session. The stock has a 52-week high of $968.99 and a 52-week low of $176.99.
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