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Tesla stock dropped then surged into positive territory Thursday as the company announced that it intends to offer approximately $2 billion of common stock in a registered public offering.

Tesla (TSLA) stock, which initially fell 4%, reversed course and ended the day 4.8% higher at 804 on the stock market today.

The offering comes as Tesla shares have surged over the past 10 weeks.

The company also granted the underwriters a 30-day option to purchase up to approximately $300 million of additional common stock.

Tesla also forecast average annual capital expenditures in 2020 and the two succeeding years to be $2.5 billion to $3.5 billion, as the company ramps production at its China factory and plans to build another plant in Germany. The company spent $1.3 billion in capital expenditures last year.

Tesla Offering A Turnabout By Musk

The offering is a turnabout by Chief Executive Elon Musk. Two weeks ago he told analysts that Tesla wouldn’t need to raise capital.

“Our capital expenditures are difficult to project beyond the short term, given the number and breadth of our core projects at any given time,” Tesla said in a Form 10-K filing on Thursday.

The company went on to say, though: “We expect operating expenses as a percentage of revenue to continue to decrease in the future as we focus on increasing operational efficiency and process automation, as well as from increases in expected overall revenues from our expanding sales,”

Wedbush Securities analyst Daniel Ives called the capital raise a “smart and strategic move” by Musk.

“The Tesla bulls (which we agree with) will say this essentially rips the band-aid off and takes the doomsday cash crunch scenario some predicted down the road now off the table,” Ives wrote in a note to clients.

Tesla Stock Seen At $1,000

“We reiterate our long-term bull case scenario on the stock is $1,000 with Tesla’s ability to ramp production and demand in the key China region during the course of 2020/2021,” he said.

Musk said he would participate in the offering by purchasing up to $10 million of Tesla stock. In addition, Larry Ellison, a member of the electric-car maker’s board of directors, will purchase up to $1 million of the shares, according to the company’s news release.

Goldman Sachs and Morgan Stanley are acting as lead joint book-running managers, according to the Tesla registration filing.

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