Tesla Motors chief executive Elon Musk will invest US$20 million in the company’s US$500 million stock offering in a show of confidence at a time when the electric carmaker is burning through cash, Reuters reported.
Tesla said on Thursday it would use the proceeds from the sale to help fund its upcoming Model 3 project and its battery factory in Nevada.
Musk is telling the market “I’m putting my money where my mouth is”, Jefferies & Co. analyst Dan Dolev said. “He did it so he kind of shows that he leads by example.”
The offering of 2.1 million shares, Tesla’s first equity sale in more than two years, comes a week after the company reported a larger quarterly loss and said it may raise more cash to offset heavy spending.
Tesla’s shares have fallen 12 percent since Aug. 5 when Tesla reported results.
Tesla, which has been losing more than US$4,000 on every Model S electric sedan it sells, had US$1.15 billion in cash and equivalents as of June 30, down from US$1.91 billion as of Dec. 31.
The company said in a filing that it assumed the shares would be priced at Wednesday’s closing price of US$238.17.
Musk, who is buying about 84,000 shares in the offering, is already the company’s largest shareholder with a 22.25 percent stake as of Dec. 31, according to Reuters data.
Tesla had 127.1 million shares outstanding as of July 30.
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