Tesla’s stock slid in premarket trading after Elon Musk’s automaker announced it plans to offer $2 billion of common stock.
Musk himself will buy as much as $10 million of stock in this offering, while Tesla board member Larry Ellison will also purchase up to $1 million.
Tesla said it plans to use the proceeds from the offering “to further strengthen its balance sheet, as well as for general corporate purposes.”
Shares of Tesla slumped about 5% in premarket trading from its previous close of $767.29. But the stock is still well ahead of where it was as recently as December. Even accounting for the premarket moves Tesla stock is still up 109%, 219% and 135% over the last three, six and 12 months, respectively. Tesla at one point earlier in the month reached as high as $968.99.
Traders had speculated that Tesla may use the recent run-up in the stock as an opportunity to raise funds by selling more shares to the public. The sudden jump in the stock raised concerns it had become a speculative bubble driven by a short squeeze and had become detached from fundamentals.
Almost exactly two weeks ago Musk declared that Tesla