A source tells Reuters [UPDATE: Tesla confirms in press release] that Tesla has
sold 13.3 million shares for $17 each, raising about $226 million. It raised the number of shares it hoped to sell by 20 percent. It had planned to sell 11.1 million shares for $14 to $16 each.
That’s more than the “as much as $213m” number floated earlier, but with a recent Toyota deal and an EV-infrastructure bill in congress, Tesla has as much wind at its back as it can ask for. But if investors do get to start trading Tesla stock starting tomorrow, they’ll have a gut check before long. Tesla lost $30m last quarter, and it the second quarter ends on Wednesday. If those numbers show another healthy loss, investors will look away knowing that they’re in a risky, long-term investment. But can a $1.6b market-cap firm really compete in development, design and manufacturing with the giants of the automotive world simply by taking in two times its 2009 revenue in one IPO?
On that point, Bloomberg BusinessWeek has an interesting insight:
At the midpoint price of $15, Tesla is valued at 5.5 times its net tangible assets, a measure of shareholder equity that excludes assets that can’t be sold in liquidation. That’s triple the median 1.82 times for automotive companies globally, data compiled by Bloomberg show.
Which means Tesla is even more overleveraged at $17/share. And Tesla’s own prospectus mentions the challenges the firm faces at its projected volumes, especially on the retail front. Unless Tesla figures out how to get state-by-state franchise laws to allow internet car sales, much more money will need to be raised. Meanwhile, the Model S has yet to be spotted publicly road testing. And the Roadster is being canceled.
At the same time, Tesla’s sheer audacity deserves at least a little respect. It’s a wild moonshot of a company that resonates with lots of Americans for a number of reasons. The West coast of the United States doesn’t have many home-grown automotive protagonists. Tesla has probably benefited to some extent from anti-petroleum sentiment stirred up by the Gulf of Mexico oil spill. Still, Tesla needs to run on more than feel-good momentum and boutique service. They need to sell cars.
“Tesla’s sheer audacity deserves at least a little respect.”
I have no respect for Tesla. By rights, Tesla should be bankrupt. The Department of Energy had no business giving Tesla $456 million of taxpayer money. In my opinion, Tesla is a scam and a racket that deserves condemnation, not respect.
Wow, so then tell me how you feel about fisker? /ducks
I’m not sure how relevant a comp is to mature auto companies. Chinese aside, most mature auto companies are not selling 1,000 now and planning for 20,000. That’s like the Solstice brand manager’s business case level volumes.
@Daaniii2,
“Tis overvalued at $1 per share.
I do so love fools….
Webvan
Pets.Com
Excite
eToys
Pets.Com
Enron
WorldCom
BearStearns
AIG
ToysRus
Lehman Bros.
We could continue this all day.
Companies like ToysRus, Lehman Brothers, etc. were viable enterprises that generated real value to shareholders for a long time before they were mismanaged or corrupted.
The examples John Horner cited were cloudy bubble concepts that never really got off the ground.
Make sure you get your sock puppet
2 Q’s. 1) Will I be able to make some money trading this stock on hopes? Cuz as an “investment” I don’t see how this possibly makes sense.
2) Enviro crazies will probably like this stock, despite the weak company performance.
If your broker has the right connections, you could have gotten in on the IPO and dump it as soon as all the envirofreaks have their piece. Too late for that now. It’s at $18.46 as I type this. If I’d gotten in on the IPO, I’d be selling it right now.
The other option is to stay out for now, wait for it to show signs of a top (I’d say within the next few days) then short it.
I’ve opted to simply stay the heck away from it.
I’d love to see them succeed. I don’t see how they can. And I definitely don’t see what others who are buying this stock are seeing, beyond maybe riding whatever enthusiasm is out there and dumping before it all comes crashing down. But I don’t even like it as a trade.
Well, at least Elon Musk made out OK.
Or his ex-wife’s lawyer.
“overleveraged “?
In what version of the English language? Capital raised via shares typically reduces leverage.
Tesla is a scam and a racket that deserves condemnation, beyond maybe riding whatever enthusiasm is out there and dumping before it all comes crashing down.
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