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Tesla To Raise Over $1.15 Billion To Help Offset Risk For Model 3 Production (techcrunch.com)
Tesla is looking to raise a total of around $1.15 billion from stock and convertible senior notes as a way to help "further reduce any risks" that it'll incur as it scales its business to handle its aggressive Model 3 production schedule, the company said. From a report: Tesla's decision to pad out its balance sheet with more capital was anticipated by many analysts, and a fair number of Wall Street watchers actually thought Tesla would seek more to help it grow based on recent comments made by Tesla CEO Elon Musk. The Model 3 is set to begin full production this year, with pre-production begun in February with a temporary production line pause to help get processes at its Fremont factory ready for the new vehicle. The split of the new funding efforts will see Tesla pursue $250 million in common stock offering, with $750 million raised via convertible notes due in 2022. Elon Musk himself will personally contribute by buying $25 million in Tesla stock.
Last fall, Tesla reported a Q3 quarterly profit just before the vote to buy up failed solar city (bailing out Elon Musk who was over levered with their worthless stock and debt). At the time, I pointed out that they were playing a lot of financial tricks to get that profit to lube up shareholders prior to the vote. Some people insisted they were now profitable. Well, they're not. They reported more losses in Q4 and now they need another billion. The model 3 will be delayed, it will be more expensive than announced, and it will be plagued with quality problems. I like Tesla, but Christ, they've been sniffing their own farts for too long.
Yep. Yet more churn.
will be gleefully happy.
When Apple issues corporate bonds despite having $200 Billion in the bank, nobody bats an eyelid. When a business that is in a relatively early state of growth and wants to fund expansion decides to borrow money (Tesla), suddenly we have people accusing Musk of being a freeloader and a charlatan, whose businesses must be on the verge of collapse.
Almost all companies who intend to grow quickly borrow money to do so, especially with interest rates being historically low. It would be bad business not to borrow the money.
All the "market" oriented people have always claimed Elon Musk's companies are going to fail. Every one of them has been wrong (and confused about it) to date.
Not a "fanboi", just an observer.
Anons need not reply. Questions end with a question mark.
Meh. It's a mix of finance and politics... buying a bit of this stock is supporting Musk, and I like what he's doing.
Yes, I'm making a rich guy richer (when he's structured things so he's not really footing the bill or all that much risk), but you can also look at it as an investment in the future instead of direct financial profit.
You know, a future with less expensive space travel, a better power grid and electric transportation, maybe even the stupid hyperloop (though I don't really buy the hyperloop arguments since most of the 'savings' are about right-of way, and that could easily be taken advantage of by traditional rail with less risk).
I find it surprising that the stock is trading nearly 3% higher on this news. Normally a stock would lose value because the shares will be diluted. (There should be some correlation between the assets of the company and the value of all the outstanding shares) I think investors are pleased that Tesla will have enough cash on hand to achieve it's goals.
One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
This because there are so many of you fools out there waving dollas at your hero. Eventually he will run out of other peoples money. I read that musk is putting up $13.5 million himself. LOL! He's is worth $13 _billion_ on paper.
Atleast he's doing something. Atleast he might succeed. What are you doing for the world, dear AC?
Elon Musk himself will personally contribute by buying $25 million in Tesla stock.
After dilution of course.
As far as I am aware the only one that has succeeded thus far is Paypal, and he founded the original company but then there was a merger and he was ousted before the sale to ebay. Obviously the guy is a good talker and knows how to raise money, but which successful companies are you talking about?
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
I don't think you understand what raising capital means.
Tesla is selling stock, and the market is buying it. Capital rounds are almost unavoidable in large, rapidly growing businesses. Investors convert their ownership from a larger share in a smaller company to a (slightly) smaller share in a company that they feel will become much larger because of it. The money gained from doing so funds the scaleup.
It has nothing in any way, shape or form to do with "subsidy". Capital rounds are capitalism in its purest form.
Stale pastry is hollow succor to one who is bereft of ostrich.
Good thing you posted as AC, don't want your name associated with not knowing a thing about stocks.
When you run your fingers through his hair, do any of the plugs come out?
This happens with all the "volatile" stocks. It is why you as an investor need to be patient and understand both short and long term implications of what is going on. Over the years I have made a killing and lost my shirt on Apple stock based on the cycles that happen with it. Some times you just need to let go...
With a market cap of $42B, the additional stock is meaningless in terms of dilution.
BTW, now $7 and change...
One of his companies successfully launched a communications satellite to geosynchronous orbit last night. That company would have been profitable last year if it weren't for a mishap that grounded the fleet, though they returned to flight in record time. Barring any more mishaps, they will be profitable this year. The company in question has a full launch manifest because of their ability to launch satellites for much cheaper than any of their competitors, and once they start reflying landed boosters, costs will come down even further. How is SpaceX not a successful company in your eyes?
It's been institutional investors buying most of Tesla's stock thusfar.
And making a mint on it, it should be added.
By the way, Anonymous Stopped Clock, when are you finally going to actually be right about something concerning Tesla? Anybody else remember TTAC's "Tesla Death Watch" series? They last updated it in 2008. It's hilarious irony now. ;)
Stale pastry is hollow succor to one who is bereft of ostrich.
Last I read, the problems with the "reusable" rockets were fairly fundamental, I wasn't sure if he had got on top of that yet.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
Right. Institutional investors are clueless about money. Slashdot ACs who know nothing about Tesla's internal figures and can't even bother to keep up on the published figures are the real financial geniuses. I'm sure you made that post from a yacht moored right offshore of your private island, didn't you?
You sound so much like the endless stream of people on Slashdot making fun of anyone who invested in Amazon because "they never turned a profit" - completely ignoring that businesses undergoing rapid scaleup by design don't return profits, and quite the opposite need regular capital rounds to pay for said scaleup.
Meanwhile, actual investors want companies with scaleup potential to do said capital rounds so that they can own a smaller piece of a much larger company. They don't want to be owning X% a Ma and Pa Roadster factory that churns out 100 cars a year, they want to be owning X/10% of the next GM.
Stale pastry is hollow succor to one who is bereft of ostrich.
Comment removed based on user account deletion
Making money hand over fist investing in viable companies, and shorting non-viable ones ;)
That would be doing something for *you* then.
It's not really wise to bet against Musk. He does make outrageous claims and plans but he usually delivers (mostly late).
Lots of hate for his success but that is not an investment strategy.
I don't read your sig. Why are you reading mine?
They just launched one of the reusable rockets last night so they seem to have overcome any issues.
I don't read your sig. Why are you reading mine?
How exactly is running a Ponzi scheme subsidised by taxpayer money doing something for the world?
We call that government
Pain is merely failure leaving the body
A Theranos comparison? Really?
Tesla is producing real products (unlike Theranos) and is delivering slightly more cars per year than that little Stuttgart automaker Porsche.
However, unlike Porsche, Tesla is investing in one of the largest and most cost-effective battery factories in the world. It is possible that when Gigafactory is running at full-scale, most of the electric auto manufacturers and power companies will be buying batteries and energy storage systems from Tesla.
Tesla isn't anything like Theranos. I predict MBA's will be reading about Elon Musk - but not in the context you describe.
Are you the same AC who was claiming (based on your own personal experience as a rocket scientist I assume) that it was impossible for a non-government entity to get into orbit?
The one last night wasn't a reuse, though the first reused booster will be either the next one or the one after, I believe.
The real issue is if Tesla has a viable business model and if its current valuation can be justified. Many Tesla naysayers, and I am one, believe the answer is "No."
Normalize interest rates and Tesla will start have to start earning serious operating capital or be in the dot-com model of "we'll make it up on volume."
As with most naysayers, you're obviously completely clueless about anything and everything to do with finances. If you did, you'd have read Tesla's financial statements and know they make a profit on every single vehicle sold. As in "sale price - (cost of materials + cost of labor) = a positive number." They most definitely can "make it up on volume" eventually. That's the whole point of this funding round—ramping up their production capacity so they can produce higher volumes. Higher volumes of a profitable product x the amount of product sold = higher profit. Tesla doesn't post a profit because they're busy sinking those earnings into building out not one but two factories. But a super genius like you already knew that.
You obviously have no clue what a convertible note is, either. The interest rate on convertible notes is often not tied to the prime rate or to any other published rate. Tesla's coupon rate on their convertible notes is habitually a fixed 1.5%. Normalize the interest rates or further denormalize them, it doesn't matter. Tesla knows how much they will be paying on their debt, and it's totally unaffected by the prime rate. Further, when those convertible notes come due, they will pay in equity, not cash. That's what a convertible note is. But a super genius like you knew that too.
Oh wait. You obviously didn't know those things. Maybe when you learn the most basic things about corporate finance and about Tesla's specific financing, you'll be a super genius. Until then, you're just an idiot.
The reusable part is really just icing on the cake and only a necessity for taking SpaceX beyond just being a good take-your-satellites-to-orbit company. Even without reuse, they are still pretty successful in the satellite launch business. As far as fundamental problems, lets talk after the SES-10 launch scheduled for later this month.
Right. Institutional investors are clueless about money.
No dumbass morons like you are fucking clueless period.
It's been stupid dumbass moron like me buying most of Tesla's stock thus far.
Fixed that for you.
The touchdown was at quite a low velocity. Don't know what you are talking about. Plus most of the cost in a vehicle is the engines, not the propellant tanks or the aeroshell.
Energy credits are a government subsidy to support electric car producers, but it's hardly a unique situation. The government subsidizes everything from corn production to aeronautics. If you are arguing that the solar power industry would not be profitable without government subsidies, than you'd have to ask yourself if the same would be true without all the government spending on stabilizing world oil supplies.
You sound so much like the endless stream of people on Slashdot making fun of anyone who invested in Amazon because "they never turned a profit" - completely ignoring that businesses undergoing rapid scaleup by design don't return profits, and quite the opposite need regular capital rounds to pay for said scaleup.
A company has to make a profit at some time though. If its discounted future cashflows aren't positive, the investment has a negative value.
To have a right to do a thing is not at all the same as to be right in doing it
they make a profit on every single vehicle sold. As in "sale price - (cost of materials + cost of labor) = a positive number."
Pretty much all companies except for basket cases on the verge of bankruptcy make a gross profit.
It's the net profit you need to look at.
To have a right to do a thing is not at all the same as to be right in doing it