Tesla Makes Secondary Stock Offering

Moneybox
A blog about business and economics.
May 16 2013 5:13 PM

Tesla Makes Secondary Stock Offering

159539744
The Tesla Model X is introduced at the 2013 North American International Auto Show in Detroit on January 15, 2013.

Photo by STAN HONDA/AFP/Getty Images

In theory, one thing a firm with a high share price can do is sell extra shares to the public to raise money. In practice, this is very rarely done but today Tesla Motors announced plans to do just that.

With the company's shares surging recently, it's going to sell 2.7 million more to the public to build up a cash stockpile and fund future investments. One possible difference-maker here is that about a quarter of the new shares will be sold to none other than Elon Musk himself for $100 million. An issue with secondary offerings, after all, is that a firm's managers deciding to sell extra shares sounds a lot like the CEO giving a vote of no confidence in his own company. The fact that Musk is increasing his personal investment in the company is a way to do a secondary offering without that taint.

Advertisement

Simultaneously, Tesla is going to raise $450 million in the bond market and use the proceeds to pay off its loan from the Department of Energy. All told it's an aggressive, confident move and I like it.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

The World

The Budget Disaster that Sabotaged the WHO’s Response to Ebola

How Movies Like Contagion and Outbreak Distort Our Response to Real Epidemics

PowerPoint Is the Worst, and Now It’s the Latest Way to Hack Into Your Computer

Everything You Should Know About Today’s Eclipse

An Unscientific Ranking of Really, Really Old German Beers

Education

Welcome to 13th Grade!

Some high schools are offering a fifth year. That’s a great idea.

Culturebox

The Actual World

“Mount Thoreau” and the naming of things in the wilderness.

Want Kids to Delay Sex? Let Planned Parenthood Teach Them Sex Ed.

Can Democratic Sen. Mary Landrieu Pull Off One More Louisiana Miracle?

  News & Politics
Politics
Oct. 22 2014 9:42 PM Landslide Landrieu Can the Louisiana Democrat use the powers of incumbency to save herself one more time?
  Business
Moneybox
Oct. 23 2014 11:51 AM It Seems No One Is Rich or Happy: I Looked
  Life
The Eye
Oct. 23 2014 12:48 PM Track Your Bag and Charge Your Phone With This Carry-On Smart Suitcase
  Double X
The XX Factor
Oct. 23 2014 11:33 AM Watch Little Princesses Curse for the Feminist Cause
  Slate Plus
Working
Oct. 23 2014 11:28 AM Slate’s Working Podcast: Episode 2 Transcript Read what David Plotz asked Dr. Meri Kolbrener about her workday.
  Arts
Brow Beat
Oct. 23 2014 12:01 PM Who Is Constantine, and Should You Watch His New Show?
  Technology
Technology
Oct. 23 2014 11:45 AM The United States of Reddit  How social media is redrawing our borders. 
  Health & Science
Bad Astronomy
Oct. 23 2014 7:30 AM Our Solar System and Galaxy … Seen by an Astronaut
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.