Tesla Shows How To Run A Secondary Offering, With Insider Buying (TSLA)
Tesla Motors, Inc. (NASDAQ: TSLA) is bucking a trend. The company has just announced a follow-on offering of 5.3 million shares of common stock. Amazingly, the shares rallied on the news because of an insider purchase of shares. What appears…
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The report noted that Elon Musk will purchase 1,500,000 shares of common stock directly from Tesla at the public offering price. On top of that, Daimler AG’s Blackstar Investco unit will purchase “up to approximately 644,475 shares” directly from Tesla at the public offering price.
What is interesting is that the only underwriter is Goldman Sachs. The company said that it intends to use a portion of the net proceeds to fund the development of its Model X crossover vehicle.
Shares of secondary offerings usually tank a stock. When a CEO and a key business partner announce that they are also buying direct stock to increase ownership, that often changes the game. Tesla shares are up 4.6% at $27.95 on more than 2 million shares after about two hours of trading.
JON C. OGG
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Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
