backtop


Print 20 comment(s) - last by IcePickFreak.. on Jul 8 at 11:59 AM


Tesla's upcoming Model S entry-level luxury EV

The Tesla Roadster  (Source: Drag Times)
IPO gives electric vehicle startup plenty of cash to work with

A vital chapter in Tesla Motors' history has now been written, with the company's first public stock offering.  The epic success should help Tesla flourish in the short term and help its financially troubled founder, as well.

The stock release comes as the company prepares its entry-level Model S luxury sedan to bring electric vehicles to the masses.  The compan also is working on plans for a Cabriolet replacement to its Roadster, which is being phased out, an electric SUV/crossover, and an electric van.

Propelled by these ambitious plans the company's entrance into the world of public trading proved an emphatic success.  The company raised over $226M USD from share purchases.  Shares, which were expected to sell from between $14 and $16 sold for approximately $17.  Additionally, where initially the company planned to release around 11.1 million shares, it was able to offer 13.3 million shares at this higher cost.

The initial public offering was the first for a U.S. automaker since Ford Motor Co. in 1956.  That IPO was significantly bigger with 10.2 million shares sold, raising nearly $660 million (in 1956 dollars).

Still the Tesla Motors IPO was a tremendous success and should give the young company the money it needs to thrive.  Tesla initially expected to get less than half of the sum it pulled in, initially seeking only $100M USD from stock purchases.

The IPO will also prove vital to Tesla Motors founder and CEO Elon Musk. Musk says he's virtually out of money.  Musk, who invested $70M USD in Tesla, sold 909,212 shares raising $15.3M USD in much-needed cash. 

His stake now drops from 36 percent to 28 percent after his sale.  It should be noted that Tesla Motors as a whole only unloaded 17 percent of its shares to the public.  That means that it is still primarily held by private owners -- the largest of which is Musk.

That also means that Tesla is now valued at roughly $1.33B USD, based on the price of publicly traded shares.

Stock has since risen to over $21.50 a share, earning those who purchased it initially, a healthy 25 percent gain.  That price will likely drop somewhat on profit taking, but its certainly a promising sign for this new star.


Comments     Threshold


This article is over a month old, voting and posting comments is disabled

The bottom line on Tesla...
By MrBlastman on 6/29/2010 3:54:18 PM , Rating: 4
They sold 126 cars last quarter. That's right, 126 cars. That works out to be 504/year at their current rate or, considering a 10%/quarter rate of growth, ~586 cars a year. That puts their total revenues at between 55 million to 64 million dollars.

Okay, that sounds great, but, considering their stock is now at ~22.50/share, that puts their market cap at around 299 million. For a company that has had a huge problem with losing money and scraping for cash, that means you'd be buying in to it at 4.67 to 5.4 times revenues !

To me, that sounds steep, far too steep to pay for a company that has had management, production and sales problems. I'd consider it for something that was making money, but for this? Seems like a total gamble to me.

Someone at Tesla should be smiling today.




RE: The bottom line on Tesla...
By smackababy on 6/29/2010 4:20:23 PM , Rating: 2
I'd say the people who buy this stock realize that the feelgood hippy garbage the government will push through to make "green" cars sell.


RE: The bottom line on Tesla...
By therealnickdanger on 6/30/2010 8:36:18 AM , Rating: 2
It was the feel good MONEY-MAKING that I liked most about it. :) I'll probably dump around noon. Get out while the getting is good. It doesn't take a genious to see a sweetheart stock like this coming, but while the stock could go up more (up 7% pre-market), I'm not going to wait around to see.


By therealnickdanger on 6/30/2010 3:08:54 PM , Rating: 2
Oh man, today was a GREAT day! Haha! $$$$


RE: The bottom line on Tesla...
By MozeeToby on 6/29/2010 5:05:36 PM , Rating: 4
What on earth makes you think the 10% growth figure is accurate? They've just purchased a manufacturing facility which will presumably allow them to build cars full time, instead of leasing a factory for a couple months. They have a new, more affordable car coming to the market in less than 2 years. They have technology sharing deals with Toyota, which will also bring in revenue with very little additional costs.

Not saying that the stock is a sure-fire way to strike it rich but estimating 10% growth for a company that is still in its infancy is extremely short sighted. By that logic, it would have taken Ford 46 years to sell a half million cars per year, something they actually accomplished in 8. Again, I'm not saying I expect Tesla to see that kind of success, just that 10% growth is quite pessimistic for a company that hopes to revolutionize the industry.


RE: The bottom line on Tesla...
By lelias2k on 6/29/2010 6:06:55 PM , Rating: 2
And don't forget their deal with Daimler.


RE: The bottom line on Tesla...
By MrBlastman on 6/30/2010 9:27:08 AM , Rating: 2
That was a stab directly at Tesla--not a truly accurate figure. ;)

But, when you think about it, consider the price range of their flagship car, which is around 109,000.00. That is squarely within the post-luxury semi-exotic range (assuming luxury autos run between 50k-75k), and the amount of people willing to shell out that kind of money for one of these things has diminished quite a bit. In some ways, they are more a novelty than a true primary car replacement.

When you consider that, the amount of people willing to purchase it drops even further. How many people do you see in America buying a 3rd car just for "fun?" Sure, they are out there, there are plenty of 3+ car garages around my house and neighborhood, but they are definitely not a true sampling of America. I happen to live in one of the wealthiest areas of the country, definitely in the top 10, and I have not seen a single Tesla yet.

Now, this is all conjecture and speculation, but, if you factor in these observations and thoughts, you can not assume that Tesla will ramp up nearly as fast as Ford did. Think about it for a minute--Ford created the Model T, a car for the masses, optimized through a production line and its cost was brought down substantially. It was not a car for the "wealthy," but a car for the everyman. Their target demographic was far broader than Tesla has limited themselves to.

Second, factor in all the competition Tesla will be facing from the other car manufacturers. Now, to be fair they are producing cars in a much lower price point, but, they detract from the novelty of owning a Tesla car. Sure, there will be those who scoff at the lower priced offerings and buy a Tesla to have an electric sports car, but, I'd argue that they are the same people that would have wanted to buy one anyways.

I don't think it is fair to say that you'd see explosive growth as a result. What Tesla needs in order to "break out," if this is truly a niche area they are going after with their flagship car--the sports enthusiast area, is some inspiration for their car beyond what it "does," such as some major race championships under their belt. If they can prove their mettle, which, when you consider the range, races are hard to even complete, you have a problem. A problem that I dare say Tesla still hasn't figured out how to overcome.

As a result, my halfhearted figure of 10% a quarter growth, doesn't look all to bad. They need a flame to ignite their brand. The IPO will get their name buzzing around, but, those who invest are also the sort who like to see numbers and results, the hype will only drive things for so long.

I compare Tesla to perhaps the potential of Google... without the numbers that Google had to back them up.


RE: The bottom line on Tesla...
By roadhog1974 on 6/29/2010 6:11:21 PM , Rating: 3
around 7x revenue is considered appropriate price for a
mature company.

4-5x for a risky new company may be slightly on the high
side but not by much, and they are hardly dabbling in
an unproved market.

as a comaprison ferrari only sell 1500 cars a year and
they are making money.


RE: The bottom line on Tesla...
By hashish2020 on 6/30/2010 2:07:46 PM , Rating: 1
The free market spoke, and you should listen. Isn't the free market the ultimate arbiter of all that is logical and defined in this world?

I mean, the invisible hand sees all with its omniscient eye.


Great!
By Dorkyman on 6/29/2010 3:49:54 PM , Rating: 2
I am happy for the Tesla people. If their vision is proved correct, they will be wealthy, and that is how it should be, in my view.

But as for me investing in Tesla's vision, no thanks. I am old enough to remember another "great" technology company a few years back. They designed a state-of-the-art business aircraft called the Learfan that was really quite revolutionary. Lots of very smart wealthy people sank tens of millions into the project. They all lost their shirts.

But good luck to Tesla. I'll be watching to see if they survive.




RE: Great!
By danrien on 6/29/2010 4:20:58 PM , Rating: 2
major difference between these two companies, based on what wikipedia quickly told me: Tesla has already proven able to produce road-worthy cars that live up to the company's promise. According to Wikipedia, LearAviation never delivered an acceptable product to the U.S. market.


RE: Great!
By lelias2k on 6/29/2010 6:14:34 PM , Rating: 2
I think the important detail here is that Tesla doesn't depend only in itself to succeed: Battery technology has to improve considerably if their cars are to have a chance of becoming mainstream.

Regardless of the reality that most people drive under 40 miles/day, no one in their right mind would consider cars with such mileage/charging time limitations as their primary vehicle. Apart from a very few people willing to make sacrifices (or planning), that is.

When we start seeing batteries that can handle 300+ real-world miles, and charging in 15-30 minutes, I believe that's when things will be turning around. Especially because by then the technology will (probably) also be offered at a lower price point.


RE: Great!
By namechamps on 6/30/2010 1:15:24 PM , Rating: 2
How about a car w/ 200 mile range in a 2 car household.

I would buy one (depending on price). Given the cost per mile is about 10% of gas. Just pretend you are paying $0.30 a gallon at the pump.

Our household has two vehicles. I would never consider getting 2 EV but 1 EV and 1 long range gasoline powered vehicle seems like a win-win.

How many times a year does a 2 car household need 2 vehicles with 300+ miles of range going in different directions? 0?


Style
By bissimo on 6/29/2010 3:27:07 PM , Rating: 2
Mick, please read this:

http://en.wikipedia.org/wiki/Inverted_pyramid

Why would you start this article by talking about the cars that Tesla produces instead of the IPO? It's bothersome to most readers and diminishes the importance of the IPO itself, which is the story.




RE: Style
By Digimonkey on 6/29/2010 3:37:07 PM , Rating: 1
Because this is a tech site, and this wasn't a tech article. Proceeding the report with tech is a ruse.


RE: Style
By mead drinker on 6/30/2010 2:54:55 PM , Rating: 2
Because it is a popularly used style called "anecdotal lead" which was in fact mentioned in the very link you provided. There is more than one way to skin a cat and either is perfectly reasonable to implement. In addition I find it hard to believe that the using this style "buried the lead" since you clicked on it to view the story.


RE: Style
By bissimo on 6/30/2010 4:30:12 PM , Rating: 2
The article has been re-written since I posted that comment. The new intro is miles ahead of the one yesterday. Nicely done, Jason.


This definitely won't happen...
By IcePickFreak on 6/29/2010 9:58:26 PM , Rating: 2
They certainly didn't drive up an artificial demand because of the 'green' frenzy. And surely they won't dump them for a huge profit in the next year or so, again before Tesla becomes a profitable company, and right before the company crashes and burns. Nope, that will never happen.




By IcePickFreak on 7/8/2010 11:59:31 AM , Rating: 2
Ok so I was wrong, it was within a week and not a year.


By Shadowmaster625 on 6/30/2010 10:38:43 AM , Rating: 3
Ha ha HA!!! I would tell investors to lay off the crack pipe, but hey more power to ya if you think this company can be worth that much when their only customers are hollywood types who want to stroke their ego. These cars are not and will never be profitable, nor are they or will they ever EVER be energy efficient. Their construction consumes more hydrocarbons and causes more pollution than 5 Honda Civics. And it still takes coal burning to charge the batteries. It is a fatally flawed concept and Tesla WILL BK for it.

EVs cannot and must not be a feelgood fad for ego strokers and fake greenies.




“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki