Now that Tesla Inc. (TSLA) - Get Report has passed regulatory production requirements and the first cars will be on roads by July 28, investors again need to ask where it will get the money to come through on its promises.
The company's shares have risen more than 40% in the roughly four months since last selling stock to the public.
In that sale, Tesla raised about $3 billion, which was in line with analysts' estimates for 2016's need at the company. Of that, $402.5 million came in the form of 1.54 million shares of stock.
Assuming the company will need more capital once it begins production, and eventually works toward selling 500,000 cars per year by 2020, a large follow-up secondary offering would dilute Tesla's shares and likely lead to a drop in its share price.
One investor, who is short Tesla's shares, suggested last month that he believed the issuance this time around will be for a much larger amount than the last, based on the company's financial needs for the coming months. A large follow up secondary offering would dilute Tesla's shares and likely lead to a drop in its share price.
But Tesla chief Elon Musk has never been too bothered about dilution, and neither, it seems, have its investors
Prices for the Model 3 start around $35,000 making it the cheapest Tesla model. The company unveiled the model last year, saying the production version would be shown off in July, since then the car has received more than 400,000 pre-orders, making it arguably the most anticipated new car launch in automotive history.
Tesla shares closed down $8.99, or 2.5%, Monday at $352.62, as concerns over light deliveries in the second quarter weighed on the stock.
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