Tesla plans $2 billion offering as Elon Musk seizes on stock surge | Auto Finance News | Auto Finance News

Tesla plans $2 billion offering as Elon Musk seizes on stock surge

A Tesla Inc. store in Frankfurt. Photographer: Alex Kraus/Bloomberg

Tesla Inc. forecast as much as $3.5 billion in capital expenditures this year, as Elon Musk rushes to bring new models to market, ramp up its first overseas assembly plant and start building another.

The high end of the electric car-maker’s projection, issued in a regulatory filing, represents a 164% increase from 2019, when stingy spending helped conserve cash. Tesla reported $1.33 billion of expenditures for all of last year, well below its initial plan for as much as $2.5 billion.

Tesla shares have marched higher since October, more than tripling since the company reported the first of two consecutive quarterly profits. Some analysts who have been reluctant to raise their price targets have questioned Tesla’s ability to deliver on its chief executive officer’s promises of future products and plants while maintaining a shoestring budget.

“We do have some questions about the sustainability of the lower capital expenditures,” Ryan Brinkman, a JPMorgan Chase & Co. auto analyst with a $260 price target for Tesla shares, wrote in a Jan. 30 report. “We are hesitant to say Tesla has turned the page with respect to sustainable cash generation.”

See: Tesla risks losing money again due to delayed expenditures

Tesla shares fell 3.5% to $740.64 as of 7:30 a.m. Thursday in New York. Analysts were projecting about $2.5 billion in capital expenditures for this year, in line with the low end of the range the company is forecasting.

On Dec. 4, the U.S. Securities and Exchange Commission closed its investigations into statements that Musk, Tesla’s chief executive officer, made in the fall of 2018 about taking the company private, as well as his prior predictions about Model 3 production rates.

But on the same day, the SEC also issued Tesla a subpoena seeking information “concerning certain financial data and contracts,” including regular financing arrangements, the company said in its 10-K filing.

— Dana Hull, Gabrielle Coppola and Ed Ludlow (Bloomberg)

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