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Tesla to Raise $2 Billion

Tesla CEO Elon Musk has said he would like the company to be self-sustaining after 16 years in business. The reality is it needs more money. On Thursday Tesla said it would raise at least $1.35 billion in bonds and $650 million in new equity.

The move followed a rough first quarter earnings report that left the company with $2.2 billion in cash and caused Mr. Musk, who had previously dismissed the idea of raising cash, to say there was now “merit” to the idea.

CNBC speculated that Tesla stock traded 4% higher because Tesla said Mr. Musk also plans to buy $10 million worth of Tesla stock himself (to add to the $12.6 billion he already has). A purchase by Musk is apparently an indication to some investors that the share price will go up in the near term, as it has after his prior purchases. But the cash-raising move will only add fuel to the argument by Tesla bears or short-sellers that the company cannot reach a scale necessary to operate profitably for long periods of time. Tesla bondholder Chamath Palihapitiya said on CNBC Wednesday that if worse comes to worst, Apple or Google could step in to buy the company. He may be right.

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