Tesla plans a $2 billion common stock offering, an announcement coming just two weeks after CEO Elon Musk said the electric carmaker would not take advantage of its surging stock price to raise more capital.

Shares of Tesla initially fell after the announcement, dropping as much as 6% in premarket trading. But the stock reversed those losses, climbing 4.8% as analysts and investors cheered the move as a way to shore up its balance sheet and possibly further its expansion plans. Shares closed at $804.00 a share, after hitting hit a high of $818 in intraday trading.

Musk himself will buy as much as $10 million of stock in the offering, while Tesla board member Larry Ellison will purchase up to $1 million. The company will offer 2.65 million Tesla shares through underwriters Goldman Sachs and Morgan Stanley, with expected gross proceeds of $2.3 billion before discounts and expenses.

Tesla said it plans to use the proceeds "to further strengthen its balance sheet, as well as for general corporate purposes."

Wedbush analyst Dan Ives praised the announcement, telling CNBC's "Squawk Box" that it will be even more difficult for Wall Street skeptics of Tesla to make their case.

"It's a smart, strategic move. It takes any doomsday scenario around cash crunch ... off the table," Ives said.

The stock previously closed at $767.29. But the stock is still well ahead of where it was as recently as December. Tesla stock has climbed about 120% and 225% in the past three months and six months, respectively. Earlier this month Tesla reached $968.99.

Traders had speculated that Tesla may use the recent run-up in the stock as an opportunity to raise funds by selling more shares to the public. The sudden jump in the stock raised concerns it had become a speculative bubble driven by a short squeeze and had become detached from fundamentals.