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.
You might also like
Japanese auto major Honda on Thursday globally launched compact sports utility vehicle WR-V in the Indian market with prices tagged between Rs 7.75 lakh and Rs 9.99 lakh (ex-showroom, Delhi)
Tata Motors has taken the covers off the new Racemo sports coupe at the 87th Geneva Motor Show – the 20th time the company has attended the European show. The
Raipur, March 25: From different parts of the country, customers, NGOs and even MLAs are demanding action against the automobile dealers for charging additional amount from customers in name of
Land Rover has added a new 2-litre Ingenium engine to the Discovery Sport line up. The new engine replaces the 2.2-litre unit, which will now be discontinued from the brand’s
Gurugram. BMW Group India will increase prices by average of 2% across the BMW and MINI product range from the beginning of Indian financial year (1 April 2017). Vikram Pawah,
Bringing cheers on faces of Sports Utility Vehicle (SUV) lovers, Nissan India has launched the New Terrano with starting ex-showroom price of Rs 9.99 lakh. Terrano with new price range