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Should Tesla do an opportunistic cash raise?

Discussion in 'TSLA Investor Discussions' started by Nicu.Mihalache, Apr 23, 2013.

  1. Nicu.Mihalache

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    #1 Nicu.Mihalache, Apr 23, 2013
    Last edited: Apr 25, 2013
    If we keep staying at those stratospheric levels and the 30 day average (or whatever base they use for the price when they issue new shares) catches up, I think it would be a good idea to have a few extra hundred million $$$ in the bank. Store & service center network, superchargers, a new production line for Model X etc. would benefit enormously. Not to mention improved flexibility in all kinds of decisions and shareholder + suppliers increased confidence that the company will not run into any liquidity problems. Even market cap / book value would go down ;)
     
  2. Cattledog

    Cattledog Active Member

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    Not an expert in the psychology of the market, but if they did raise cash they'd get it at almost half the dilution level as last Fall...
     
  3. Zzzz...

    Zzzz... Member

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    Tesla would need to raise half a billion+ $$$ for 200.000 Gen-III units a year plant and supply chain upgrades....

    IMO.

    But hope they will wait till stock reach $70-$80 level...
     
  4. DonPedro

    DonPedro Member

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    I think they should, maybe to be announced together with the Q1 earnings (if as good as suspected on this forum). If they do it, they've done a nice buildup with the "trilogy", Elon Musk in TIME mag, good results etc.

    I can personally attest to the saying: "Raise cash when you don't need it".
     
  5. Causalien

    Causalien Reaper of Trolls

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    If they can blow through expectations in q1 earnings then the market will forgive them. i.e. gap up after conference call.
     
  6. GenIIIBuyer

    GenIIIBuyer Member

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    I'd rather see them wait if they are able to. If TSLA is able to hold onto these gains, with a $6B market cap Tesla now has a market cap greater than 75 companies in the S&P 500. Think there are a lot of people beginning to front-run the index funds. Good time to raise would be shortly after addition into S&P 500.

    - - - Updated - - -

    List of S&P 500 companies ranked by market cap found here: http://ycharts.com/rankings/index_sandp_500/market_cap?p=9&s=calc&d=asc
     
  7. Nicu.Mihalache

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    The only thing they can blow is reservation rate and gross margin; anything else is baked into the price at 150%. If there is no real nice surprise in the conference call, expect a hefty drop the day after.

    Don't shoot the messenger!
     
  8. Robert.Boston

    Robert.Boston Model S VIN P01536

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    S&P won't add a firm to its 500 index until they have 4 quarters of profitability:
     
  9. smorgasbord

    smorgasbord Active Member

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    #9 smorgasbord, Apr 23, 2013
    Last edited: Apr 23, 2013
    The CC could be a couple weeks away yet. What is TSLA going to do in the interim? With no news, there's no sign of it heading down. Momentum seems to be carrying the day after day after day. Elon had promised some announcements, and the timing would appear to be before the CC. Those will move the stock in the interim.

    Anyway, sounds like you've sold your Tesla. Speaking of Capital Raises needed, rumor is you've moved the profits into Axion.
     
  10. Nicu.Mihalache

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    #10 Nicu.Mihalache, Apr 23, 2013
    Last edited: Apr 23, 2013
    LOL I'm rolling my J14 calls higher and extracting cash from TSLA (sold a few as I was on margin thanks to AAPL) - btw, if you want to follow my trades in near real-time, I post them on traderhood.com. Only about 15% of that cash went into Axion, in which I have 170k shares accumulated in over 18 months. There is no competition or conflict of interests between Tesla and Axion.

    There is nothing more that I would love to have than the real short squeeze. The only thing better is two short squeezes, one "soft" to $65 or so, so I could extract much more cash from my calls, and buy cheap puts. Than back below $40 so I can load up the missiles and cash puts and then straight to $100. Again, very cheap puts will triple that gain with 10% investment from previous profits during the two months while we come back to earth.

    But unfortunately reality is much harsher, as many newbies around here will learn. But it will be too late to give any advice ;)

    Oh, you forgot to quote "Don't shoot the messenger!" from my previous message. And the "opportunistic cash raise" is more or less what Elon said about one year ago that they will not hesitate to do. This would give them a much more stable position as a company, regardless of the share price gyrations.
     
  11. smorgasbord

    smorgasbord Active Member

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    #11 smorgasbord, Apr 23, 2013
    Last edited by a moderator: Apr 24, 2013
    Interesting. I just started an Advanced Options Trading thread and the kick-off was rolling Calls to lock in gains.

    My Axion comment was just pointing out an interesting co-incidence with the Capital Raise link - Tesla might want to do one, but Axion needs to do one and soon. Petersen's fooled a lot of retail investors in a so-far successful effort to keep his own million dollar investment from going completely under - I'm surprised you fell for it, but that's a topic for the AXPW Discussion thread.
     
  12. vgrinshpun

    vgrinshpun Active Member

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    They probably can, but I do not think that they need to, or plan to do that.

    Tesla is on track to produce 6500 cars in Q2, 8450 in Q4 and somewhere in-between in Q3. Their margin, when regulatory credits are taken into account, is probably already at 25%. The regulatory credits will likely to go down, but not to zero as 2012 10-K indicated that Tesla has agreements for sale of substantially all of GHG credits in 2013 and 2014, and portion of total ZEV credits earned from sale of cars in 2013. The credits, off course, apply only to cars sold in US. The Model S margin exclusive of ZEV, meanwhile, will progress to 25%, picking up slack for the regulatory credits. As far as the margin is concerned, based on information Tesla publicly released about Q1, they are ahead of what was projected in Q4 2012.

    Q2: 6500 cars at ASP of $90,000 and 25% margin, less $116M for R&D and SGA results in $30.25M in profit
    Q4: 8450 cars at ASP of $90,000 and 25% margin, less $120M for R&D and SGA results in $70.125M in profit

    In 2014, according to internal look ahead given during the Q4 2012 CC Tesla is gearing up to sell 40K - 45K cars. After doing the math, assuming yearly expenditure of $500M for R&D and SGA the corresponding profit would be $400M - $512M.

    In conclusion, there is certainly an opportunity and enough market good will to raise cash, but I do not think that this is in Tesla plans.
     
  13. ModelS8794

    ModelS8794 Member

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    You feel this has any connection to reality only on Model S sales? Model X will not enter production in time to make much of an impact on 2014 sales.
     
  14. vgrinshpun

    vgrinshpun Active Member

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    I know that it sounds overly optimistic, but numerous bits of information disclosed by Tesla so far seem to point that this is indeed what they believe internally. Take 2012 CEO incentive options plan. The first two parcels that can be loosely tied to MX-Alfa and MX-Betta prototypes correspond to market cap of $7.2B and $11.2B. These two points roughly coinside with the 2013 and 2014 outlook mentioned in my post. Note that both production milestones above will be achieved before MX production.

    Look at another metric - opened and "opening soon" stores in Europe - total of 13. Using approach elaborated on elsewhere on this Forum: 360 x 13 x 2 = 9360. This roughly equal to 10,000 annual sales in Europe that EM mentioned during the Q4 2012 call.

    Once again, this is not my estimates, but what I believe Tesla is internally holding to be true. Personally, I am cautiously optimistic - just relying on the Tesla's track record here - if anything, their projections are usually conservative.
     
  15. brianman

    brianman Burrito Founder

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    Nitpicker's corner: Mods please change "rise" to "raise".

    Sorry, it's been bugging me.
     
  16. Nicu.Mihalache

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    Sorry for the typo, not sure it's from the hand or brain. Tried to edit first post but that does not change the thread title :(
     
  17. brianman

    brianman Burrito Founder

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    No worries. It kinda sucks that we can't retitle our own threads (within reason) at times.
     
  18. Robert.Boston

    Robert.Boston Model S VIN P01536

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  19. Causalien

    Causalien Reaper of Trolls

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    Even though I am a fan of tsla, I have to disagree. If there is one thing that has been bugging me, it is that tesla consistently come out at the lower end of their guidance. Projections are anything but conservative and gets guided down numerous times. Everything else is according to plan, now if only they can stop over promising. Or slow down EM's king crazy moments a bit.

    Maybe I am just jaded after sitting through too many earnings calls. I cringe when I hear anything resembling ceo's sunshine and rainbow speech. What drew me initially to EM as a ceo was truthfulness of an engineer/geek/scientist.
     
  20. brianman

    brianman Burrito Founder

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    I wouldn't phrase it the same way, but I have similar concerns.
     

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