Short-Term TSLA Price Movements - 2015

[virtuesoft]

Tesla have expanded the secondary offering to 2,694,934 shares at 242.00, raising the proceeds to $642,501,910.

http://ir.teslamotors.com/secfiling.cfm?filingid=1193125-15-290590&CIK=1318605

 

[Blip]

Just received Form 424B5 / Prospectus Filed Pursuant To Rule 424. 2,694,934 shares with offering price of 242.00. A slight adjustment from the preliminary prospectus of 2,100,000 Shares at $238.17 per share.
Edited link

 

[BoerumHill]

$150M doesn't seem like a slight adjustment.

AH/pre-market was up $2.98, down to 2.50, 2.09 and then 1.99 the last few minutes.

We shall soon find out what the market thinks of this change.

ETA: and now bounces back up to 2.49. Should be an interesting Friday.

 

[jhm]

In 1984 there were 43 active oil refineries in CA. Today there are 17. At first the CA Oil Refinery lobby was adamantly against CARB efforts to clean up gasoline and diesel.

What they found out is only a few companies in the world had the chemical engineering chops to meet the standard. As standards got tougher companies dropped out of the competition, CA gasoline market became more isolated, the margin between demand and capacity became smaller. Profit margins grew. Now they stay out of the way of tougher gasoline/diesel regulations or actively lobby for them.

Meanwhile at the retail level tougher requirements to prevent gas/diesel from seeping from storage tanks into soil and ground water have become tougher and tougher.In the aughties it took the average gasoline station $1M to remove old outdated storage tanks and replace them with new compliant storage tanks. Many preferred to get out of the business.Today, there are approximately 13,500 gasoline stations in CA. I don't know how many have closed in the last 30 years but I would say at least twice that number as the population has grown. That spells higher prices.

Thanks for the background. It always amazes me how industry will rail against regulation only to turn around to use those regulations to protect themselves against competition. It's an understandable progression. We are already seeing this with Tesla. Tesla has figured out a smart smart way to ace CAFE, ZEV and other regulatory issues. This gives them a distinct advantage. In turn, they will advocate for the perpetuation of these environmental standards. Some see this as self-serving, but in the case of Tesla I believe there is a genuine commitment to environmentally sustainable transport which has been their whole reason for being. What is needed is one or two other automakers to break rank with ICE makers, and we would see the industry split on these policy issues. Policy, then, could turn much more aggressively against ICE.

The smart thing for just about any company is to tune your business toward regulatory efficiency so that regulations give you a competitive advantage. It's called regulatory arbitrage, and it's just smart business.

 

[BoerumHill]

 

[doggusfluffy]

Solar is having a great year, except on Wall Street

For now, he is waiting for concern about low oil prices to blow over. "Attractive fundamentals are often powerless in the face of the arbitrary preferences of the crowd," he said.

 

[jhm]

Use of Proceeds

The use of proceeds has changed a bit. Here's the latest.

We estimate that our net proceeds from the sale of the shares of common stock in this offering will be approximately $641.9 million, after deducting underwriting discounts and commissions and estimated offering expenses that we must pay. If the underwriters’ option to purchase additional shares in this offering is exercised in full, we estimate that our net proceeds in this offering will be approximately $738.3 million, after deducting underwriting discounts and commissions and estimated offering expenses that we must pay.
We intend to use the net proceeds from this offering to accelerate the growth of our business in the U.S. and internationally, including the growth of our stores, service centers, Supercharger network and the Tesla Energy business, and for the development and production of Model 3, the development of the Tesla Gigafactory and other general corporate purposes. Pending use of the proceeds as described above, we intend to invest the proceeds in highly liquid cash equivalents or United States government securities.

So now net proceeds are $641.9M to $738.3M is underwriters exercise option to buy additional shares. So this is up substantially from what was floated before. It seems Tesla had tested the waters and found that the market would support a bigger draw.

Again the stated intent is "to accelerate the growth of our business." I read this as incremental growth above what has been planned for to date. Again there is no mention of Model X. Apparently there is no potential to accelerate on that front. However, there is potential to roll out stores, service centers and superchargers more quickly than planned, and if the Model X is a big hit, it would be good to harvest this incremental demand. There are myriad ways to accelerate Tesla Energy. I suspect some key acquisitions may be under consideration. Accelerating the Model 3 time line would be a huge play as would building out the Gigafactory bigger and faster than originally planned. So what do we make of "and other general corporate purposes"? This is pretty open ended language. So conceivably just about anything, even mitigating a botched Model X launch, could come under this language. But I do not think we need to indulge such bearish cynicism.

The clearly stated intent is "to accelerate the growth of our business." In time, we should expect management to reveal specific plans for how they intend to accelerate growth. I am sure that there are strategic reasons why these incremental plans have not been made public. If they make an acqisition, if they accelerate Model 3, if the expand the Gigafactory, these will be big things and we'll be glad they have the cash to pursue them. Note that accelerating Model 3 also entails rolling out their sales and support networks more quickly.

 

[CALGARYARSENAL]

This better be a "one and done." Their CFO better be damn sure no more money is required for a number of quarters. Just like the FED, they won't have any ammo (imho) if there is a crisis in the future. People won't be willing to buy more shares. The next issue will have to be when things are looking much better. This is one wild ride. Cash on sidelines ready to deploy if/when some public relations issues (supercharging/rollout delays/drivetrain) are at least addressed. I applaud the Tesla longs willing to ride this out. You deserve to be rewarded.

Lastly oil. Oil has to stop going down. I don't agree low oil prices have no impact on Tesla. The general public cannot see the advantages of an electric vehicle over gas guzzlers if the price of oil is next to nothing. I believe Elon agrees that low oil isn't helping.

 

[aznt1217]

Another $150mm is really... not much at all and I also like the green shoe option and that management is being prudent and keeping an eye on Cash Flow. Reminds me of Apple in 2008

 

[Krugerrand]

Another $150mm is really... not much at all and I also like the green shoe option and that management is being prudent and keeping an eye on Cash Flow. Reminds me of Apple in 2008

Am I recalling correctly that on the previous occasions they raised more cash than originally intended? Because there's always been more interest than thought.

 

[ev-enthusiast]

Analysts at Stifel Nicolaus reiterated their "buy" rating for TM, target price $400 (link).

 

[Drax7]

This better be a "one and done." Their CFO better be damn sure no more money is required for a number of quarters. Just like the FED, they won't have any ammo (imho) if there is a crisis in the future. People won't be willing to buy more shares. The next issue will have to be when things are looking much better. This is one wild ride. Cash on sidelines ready to deploy if/when some public relations issues (supercharging/rollout delays/drivetrain) are at least addressed. I applaud the Tesla longs willing to ride this out. You deserve to be rewarded.

Lastly oil. Oil has to stop going down. I don't agree low oil prices have no impact on Tesla. The general public cannot see the advantages of an electric vehicle over gas guzzlers if the price of oil is next to nothing. I believe Elon agrees that low oil isn't helping.

Once the firm reaches sales of 100,000 cars or so, it will be able to self finance its growth.
100,000 cars at net profit of $10,000 per car amounts to about $1 billion profit per year.
That objective seems very likely by next year. The energy storage business should be
profitable from the outset. Once that objective is achieved, raising billions for model 3
will be easy.

 

[CALGARYARSENAL]

Once the firm reaches sales of 100,000 cars or so, it will be able to self finance its growth.
100,000 cars at net profit of $10,000 per car amounts to about $1 billion profit per year.
That objective seems very likely by next year. The energy storage business should be
profitable from the outset. Once that objective is achieved, raising billions for model 3
will be easy.

I think you are right. I should clarify that I don't personally know or think there are issues with drivetrain still after Musk stepped into address last year, perhaps they have been solved, just was reading recent threads with people complaining about having to wait for them. I am confident that Tesla will step up to the plate and get these public relation questions addressed asap.

Cheers.

 

[techmaven]

I'd like to point out, now that we've seemingly safely side-stepped the potentially thorny issue of a capital raise in 2015, that we really still don't understand the issues surrounding the Model X launch.

Well, we do have Tesla's side of things to some degree... 50,000 to 55,000 total vehicles, X to launch in Q3, and ramp up in December.

Does that mean the new expansion is going to be pumping out Model S's so we can expect a much higher production volume of S's in Q4? What does "hand built" volumes mean in Q4 in October and November?

These issues will likely keep the stock simmering for a bit here, as the risks to the year end projections are still quite high. Of course, if Tesla ends up clarifying any of this, or even PowerWall/PowerPack launch real numbers/projections come in with a surprise, then we can start partying.

 

[sahanim]

Not for the faint of heart. might induce insta-rage

Bloomberg Business

​

Tesla Cars: A Loss Leader for Innovation? - YouTube

 

[sub]

If they only knew how stupid they looked, which will only get worse as time passes. I love how the two sit there so smug as if they have any clue what they are talking about.

 

[NigelM]

http://fortune.com/2015/08/14/tesla-boosts-stock-sale/

On Thursday the company submitted a filing that said it was planning on raising $500 million by selling 2.1 million shares. But a day later — after likely seeing support from shareholders — Tesla said it plans to sell 2.69 million shares, which could raise $652 million.
If the underwriters exercise their full options, Tesla could raise $738.3 million.

 

[The Blue Owl]

If they only knew how stupid they looked, which will only get worse as time passes. I love how the two sit there so smug as if they have any clue what they are talking about.

Matt Miller's position and tone with respect to Tesla evolved over time, and he's actually a fan now. He is trying to keep the host at bay. It's the host that's the idiot. And the other guy with the glasses.

 

[sub]

Matt Miller's position and tone with respect to Tesla evolved over time, and is actually a fan now. He is trying to keep the host at bay. It's the host that's the idiot. And the other guy with the glasses.

Those are the two I was referring to. The female seems to recognize they are idiots but maybe is entertained by then making fools of themselves.

 

[Thumper]

Who is the moron with the glasses.