Tesla IPO Launches Unexpectedly High at $17/Share, Company is Worth $1.33B USD
June 29, 2010 3:05 PM
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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
, 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
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.
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RE: The bottom line on Tesla...
6/29/2010 5:05:36 PM
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...
6/29/2010 6:06:55 PM
And don't forget their deal with Daimler.
RE: The bottom line on Tesla...
6/30/2010 9:27:08 AM
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.
"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard
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