Tesla raises $1.2 billion to pad cash reserve, help launch Model 3

Tesla raises $1.2 billion to pad cash reserve, help launch Model 3

Tesla Inc.’s $1.2 billion share and convertible debt offering on Friday demonstrates once again the unflagging ability of the luxury electric carmaker and its high-profile head, Elon Musk, to tap Wall Street for sorely needed cash.

In its second such visit to the capital markets in the past 12 months, the Silicon Valley company offered stock and convertible notes, roughly 20 percent more than it planned but less than what investors had generally been expecting, ahead of the launch of its crucial Model 3 sedan.

Tesla shares rose slightly to $262.42 in afternoon trading on the Nasdaq exchange.

The latest funds remove “an overhang on the stock,” in the eyes of investors, wrote analyst Jamie Albertine of Consumer Edge Research, given uncertainty over how Tesla would meet its robust spending needs, from the Model 3 launch to its massive battery factory in Nevada.

More broadly, the successful offering underscores the ability of Musk to convince Wall Street over and over of his long-term vision — that Tesla will someday become a carbon-free energy and transportation heavyweight.

Despite facing major financial hurdles, and the dilutive nature of stock sales, the triumphant offering confounds Tesla skeptics, who point to the loss-marking company’s $42.37 billion market capitalization — which is greater than that of Nissan Motor Co., which reported a profit of $4.7 billion last year.

Tesla’s plan to spend $2 billion-$2.5 billion in the first half of 2017 in capital expenditures ahead of the July Model 3 launch left little cushion with $3.39 billion on the books in cash and cash equivalents at the end of 2016.

“Liquidity and cash burn remain key near-term risks, and investors may grow weary of continued raises as this is the second capital raise in a year,” UBS analyst Colin Langan said in a note to investors.

The bulk of Friday’s offering, or $850 million, came from convertible senior notes due 2022, with $350 million raised from the sale of 1.3 million common shares at $262 apiece.

That was higher than the $250 million in stock and $750 million in notes the company said it expected to sell.

Musk, already the company’s top shareholder with a stake of about 21 percent as of December, bought 95,420 common shares for $25 million in the latest stock sale, Tesla said.

The 1.3 million shares sold represents about 0.8 percent of Tesla’s outstanding shares as of Dec. 31.

Automotive News

Previous Mercedes says recall won't hurt U.S. sales 'Parts are flowing to dealers weekly'
Next Trivendra Singh Rawat sworn in as Uttarakhand CM

About author

You might also like

Automobile News 0 Comments

2017 Acura NSX

In 2017 Acura NSX  strikes us as a brand in need of reinvention from the bottom up, starting with a new Integra, the car that the people have crowned as

Automobile News 0 Comments

Maruti Suzuki New DZire Unveil On April-24-2017

India’s bestselling sedan is all set to break cover in a completely new avatar. The third generation of the Maruti Swift DZire will be unveiled on April 24. The Indian

Automobile News 0 Comments

Experience exclusive race track atmosphere with completely new driving dimensions.

Gurgaon: BMW India announces the launch of the ‘BMW M Performance Training’ in India. The exclusive driver training program will demonstrate the dynamism, versatility and high performance of the BMW

Automobile News 0 Comments

Skoda Kodiaq all set for India market

The much-awaited seven-seater SUV- Skoda Kodiaq is all set to hit Indian automobile market this year. The SUV has arrived in India and spotted on road for maiden time without

Automobile News 0 Comments

Tesla looking to raise $1.15 billion to fund its Model 3

A capital raise by Tesla has been anticipated since late last year, gaining steam last month after Chief Executive Elon Musk said the company could be “close to the edge”

Automobile News 0 Comments

BMW Plant Chennai scores decade of ‘Sheer Driving Pleasure’

Chennai, March 29: BMW Plant Chennai started operations on 29 March 2007. Since then, the BMW Group has strengthened its commitment to the Indian market and has continuously increased the

0 Comments

No Comments Yet!

You can be first to comment this post!

Leave a Reply