Tesla is raising $1 billion in order to help speed up the production of the Model 3. Meanwhile, analysts downgrade Tesla's stocks.
News reports by NBC News and Wealth Daily reveal that Tesla's cash reserves are getting low. In response to it, the car manufacturer is selling stocks and senior notes in order to raise funds and speed up Model 3 production.
The company wants to raise $1.15 billion, reports Wealth Daily. To be specific, NBC writes $250 million in common stock and $750 million in convertible senior notes are available. The purpose of the sale is to reduce any risks associated with the firm's rapid scaling due to the Model 3 launch, says Tesla.
The announcement of the Tesla sale was accompanied by analysts downgrading Tesla's stocks. Efraim Levy of CFRA recommended "sell". This is similar to that of David Tamberrino of Goldman Sachs, writes NBC News.
The news website wrote further that an advisory from Levy noted that the car manufacturer is not selling as much stock as a lot had expected. Levy added that a lower than expected dilution is a positive thing, but the risks still exist.
CEO Elon Musk promised a volume of 500,000 Model 3 cars in 2018 and 1 million in 2020. It adds that the margins on the Model 3 will be tighter, and that including the federal $7,500 tax credit, it will be roughly $34,000.
Tesla's quarterly profit has only been turned twice since it went public. Despite being able to reduce its deficit in half, the firm still managed to lose 78 cents per share during the final quarter of the year 2016 which is $121.3 million.
Tesla CEO Elon Musk currently serves as part of Donald Trump's advisory council along with Uber's Chief Executive Travis Kalanick. Read more about it here. Follow Jobs & Hire for more news.