Wedbush Securities’ Dan Ives praised Tesla’s announcement on Thursday morning of a new $2 billion common stock offering.
“It’s a smart, strategic move,” Ives said on “Squawk Box.” “It takes any doomsday scenario around cash crunch … off the table.”
Shares of Tesla , which have skyrocketed recently, were under some pressure on Thursday after the company said before-the-bell that it’s planning a $2 billion common stock offering. It comes just two weeks after CEO Elon Musk said Tesla would not raise more capital.
Musk is set to buy as much as $10 million of stock in this offering, while Tesla board member Larry Ellison will also purchase up to $1 million. The company will offer 2.65 million Tesla shares through underwriters Goldman Sachs and Morgan Stanley.
Tesla said it plans “to further strengthen its balance sheet” with the offering’s proceeds. “It’s really about the cash crunch. Now they’ve solidified the balance sheet by deliveries going up into the right,” Ives said.
Ives holds a baseline price target of $710 per share and maintains his neutral rating on the stock. He also set a $1,000 bull case on the stock.
Tesla currently has a little more than 180 million shares outstanding.
Shares of Tesla on Thursday fell nearly 5% in the premarket. However, even with the decline, 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.
— CNBC’s Michael Sheetz contributed to this report.