Good news from
Tesla Motors Inc.
) again! The electric car maker plans to raise as much as $830
million through a stock and debt offering that will not only be
utilized to repay $465 million U.S. Department of Energy (DOE)
loans with interest but also for general corporate and other
purposes, may be expansion plans.
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Tesla thought it is better to strike the iron when it is hot. Its
share prices started soaring following the reports of its
first-ever quarterly profit on May 8. After the earnings release,
share price surged nearly 53%.
On May 14, Tesla shares hit new 52-week high of $97.12, which is
above its previous level of $88.00 a day before, and closed at
$83.24 on the same date. The closing price represented a whopping
one-year return of 176.9% and year-to-date return of 135.4%. The
announcement of new stock and debt offering would definitely act
as another catalyst in pushing up the share price.
Tesla plans to offer 2.7 million shares and $450 million in
convertible debt due in 2018. Tesla has also given a 30-day
option to its underwriters to buy an additional 405,454 common
shares and $67.5 million in notes. Considering the last closing
price of $84.84, the stock offering would raise $229.1 million,
excluding the sale of additional shares to underwriters.
Tesla's chief executive officer and cofounder Elon Musk plans to
purchase $100 million worth of shares at the same public
offering. Of the total amount, about $45 million worth of shares
would be acquired through the common stock offering and the
remaining $55 million would be purchased directly in a private
placement. Currently, Musk holds about 27 million shares of
Tesla, which is equivalent to roughly 24% of the company's
In 2012, Tesla lost $396.2 million or $3.69 per share compared
with $254.4 million or $2.53 per share in 2011. Due to a good
start in 2013, the company had expected to repay its DOE loan
much earlier and boost production of vehicles to lower production
cost. Tesla made its first DOE loan repayment of nearly $13
million in December last year.
Tesla reported its first-ever quarterly profit of $15.4 million,
or 12 cents per share (on an adjusted basis) in the first quarter
of 2013 compared with a loss of $79.3 million or 76 cents in the
corresponding quarter of 2012. This indicated a whopping positive
earnings surprise of 271.4% given the Zacks Consensus Estimate of
a loss of 7 cents for the quarter.
Revenues jumped manifold to $561.8 million from $30.2 million in
the first quarter of 2012. Thanks to the impressive 5,000 units
of Model S electric car sales during the quarter.
The automaker continued to supply full electric powertrains and
battery packs to
Toyota Motor Corp.
) for their RAV4 EV program. It also completed various
) Mercedes Benz B-Class EV program, which contributed to total
development services revenues of nearly $7 million.
Tesla expects to manufacture 5,000 Model S vehicles in the second
quarter of the year. For full year 2013, the company expects to
deliver 21,000 Model S cars globally, up 5% from its prior
guidance of 20,000 units.
Shares of Tesla retain a Zacks Rank #3, which implies a
short-term (one to three months) Hold rating. Currently,
) with Zacks Rank #2 (Buy) is performing well in the broader