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Tesla Selling $500 Million in Common Stock to Fund Model 3, Gigafactory

Motor Trend logo Motor Trend 8/13/2015 Megan Stewart

Before Tesla announced that it would be selling off common stock to help fund the Model 3 project, the electric automaker was said to be losing more than $4,000 for every Model S sold. With stock sales down 12 percent since August 5, Tesla needed to raise more cash to help with its heavy spending.

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Tesla stock is up 3 percent since the sale began, and CEO Elon Musk announced that he will personally invest $20 million, translated to roughly 84,000 shares, as a show of confidence.The latest common stock offering will slightly reduce Musk's position as the largest shareholder in the company. He had a 22.25-percent stake at the start of 2015, according to data from Reuters.

Tesla will be offering 2.1 million shares to the public, which it hopes will give it a return of $500 million. This marks the first time in over two years that the electric automaker has offered an equity sale, which is attributed to a larger quarterly loss than expected.

In addition to needing money to produce the 3 Series-fighting Model 3 that's set to go on sale in 2017, Tesla needs the funds to build its battery Gigafactory in Nevada. Goldman Sachs & Co and Morgan Stanley will be the lead joint book-running managers for the sale, and J.P. Morgan and Deutsche Bank Securities will be additional book-running managers.

Source: Tesla, Reuters

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