Tesla Motors Inc. boosted its stock offering to about 2.7 million shares from 2.1 million, giving itself a bit more breathing room as it prepares to start selling its Model X sport utility vehicle.
The maximum offering price was set at $242, to raise about $642 million, the company said in a regulatory filing on Friday. The underwriters will have the option for an additional 404,239 shares, Tesla said.
The smallest and youngest publicly held U.S. automaker faces huge capital expenditures as it expands globally and triples its vehicle lineup. During an earnings call with analysts last week, Chief Executive Officer Elon Musk said the company may raise equity capital “as a risk-reduction measure.”
Tesla rose 0.6 percent to $243.97 at 10:57 a.m. in New York. The shares gained 9 percent this year through Thursday, as the Standard & Poor’s 500 Index advanced 1.2 percent.
Musk has been candid about Tesla’s need for capital spending and its lack of profitability. Increasing battery production and developing new models will require billions of dollars in investment and delay consistent profitability.
During an auto-industry event in January, Musk said the Palo Alto, California-based company might become profitable on a net basis by 2020, when annual sales reach 500,000.
“They are raising capital to fund growth, which is a good thing,” Dan Dolev, an analyst with Jeffries LLC, said after Tesla announced the initial plan Thursday.
Musk has indicated preliminary interest in buying as many as 82,645 shares in the offering for a purchase price of about $20 million, the company said.
Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co. and Deutsche Bank AG are among the underwriters, according to the filing.