What happened
Shares of electric-car company Tesla (TSLA 3.25%) jumped on Friday, marking two days in a row of meaningful gains for the stock. Shares rose as much as 5.1% today and were up 4.5% as of 1:30 p.m. EDT.
The stock's gain follows news that Tesla increased the amount it was raising in a debt and equity offering -- a move that credit rating agency Moody's supports.
Image source: Tesla.
So what
Tesla said Friday morning it was increasing the total amount of capital it was raising in a stock and debt offering to as much as $2.7 billion -- up from a previous target for as much as $2.3 billion. In addition, CEO Elon Musk expressed interest in buying up to $25 million worth of Tesla stock, an increase from a previous plan to buy up to $10 million.
Moody's senior vice president Bruce Clark was pleased with the news, noting in a tweet from the agency's official Twitter account that the offering "is credit positive and it will boost the company's liquidity profile by taking its cash position to over $4 billion."
Also helping the stock may be that the company reiterated its guidance for 90,000 to 100,000 deliveries in Q2.
Now what
In a filing with the Securities and Exchange Commission, Tesla indicated it would use the cash to strengthen its balance sheet and for general corporate purposes. But Musk said during a call with investors yesterday that it would also serve as a buffer if a recession occurs.
The fresh capital will build on a cash position of $2.2 billion at the end of Tesla's first quarter.
As of 1:30 p.m. EDT, Tesla shares are up about 9% over the past two days.
