Tesla to Issue More Stock, Pay Off Energy Loans with Proceeds
May 16, 2013 1:58 PM
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Elon Musk plans to buy $100 million of shares of common stock at the same public offering price
Tesla Motors wants to sell about $830 million in shares in order to
repay its federal loan
in the shortest amount of time possible.
In a U.S. regulatory filing and press release, Tesla said that it plans to use $450 million in convertible senior notes (which are due in 2018) and sales of 2.7 million shares (valued at about $229 million at yesterday's closing price) to pay back its $465 million federal loan from the U.S. Department of Energy (DOE).
Tesla received the federal loan in 2009 through the Advanced Technology Vehicles Manufacturing program. Back in March of this year, Tesla received permission to pay off the $465 million five years ahead of schedule -- which would put it at mid-2017 instead of 2022.
Tesla CEO Elon Musk, which is Tesla's biggest shareholder, even announced that he plans to purchase $100 million of shares of common stock at the same public offering price. He will invest about $55 million in a private placement and $45 million in the public sale.
This year has certainly been kind to Tesla. Tesla began shipping 500 Model S' a week in March, exceeding the sales outlook of 4,500 posted in the February shareholder letter. To complement these sales, the electric auto maker has
worked hard to please customers
with a new battery replacement program as well as new service programs, which feature valet service for customers who need to send their Model S' to the shop.
Earlier this month, Tesla reported
its first profitable quarter
. For Q1 2013, Tesla reported a net income of $11.2 million, which was quite a jump from an $89.9 million loss in the year-ago quarter. Excluding certain items, Tesla's profit came in at 12 cents a share, which was a boost from a loss of 76 cents a share in Q1 2012. Analysts expected a profit of about 4 cents a share.
Revenue also saw a huge year-over-year boost, totaling $562 million (up from $30.2 million in the year-ago quarter).
Tesla even managed to sell 4,900 Model S sedans in the first quarter, beating its previous projections of 4,500. Model S deliveries for the entire year should total 21,000, which slightly exceeds previous forecasts of about 20,000.
"2013 is off to a strong start, and we look forward to seeing more of you on the road in a Model S this year," said Tesla earlier this month.
Tesla shares rose as much as 12 percent. The shares gained 8.1 percent to $91.72 at 11:45 a.m. in New York time after reaching a high of $95.
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5/17/2013 8:21:35 AM
They certainly don't have the profit or revenues to justify anywhere near it's current stock price, but now that Tesla has proven they really know what they're doing, I guess people are projecting them to scale up to 100k+ volume in maybe 5 years, which probably makes sense. Can't make money off a stock unless you're ahead of the curve.
Definitely a great move by Tesla to capitalize on the price by issuing more shares. Can't wait to see how well they scale up volume.
5/17/2013 9:23:01 AM
Stock price is based on future earnings, people are betting that they will continue to ramp up production and bring the price down to keep demand high. I think it's a safe bet, Tesla has consistently reached their goals (goals that many people said were impossible). They haven't always hit the timelines that they've laid out, but they've done some incredible things.
If I have a real concern it's that they could be underestimating how much some of their long term programs cost. Valet service, battery replacements, free charging... it all adds up and a lot of it won't come due for 5-10 years yet.
5/17/2013 8:55:29 PM
These are smartly chosen programs, though, because nobody else can match them. The average lifetime supercharger use for a Model S is probably going to be a small percentage of the car's cost. Gas car makers obviously can't match that.
The large battery means that a mere 1000 cycles is needed to hit 200k miles, so battery replacement costs should be pretty minimal. The batteries are rated to do many more cycles. It's a bigger issue for lower cost, lower range EVs.
The valet service is affordable for Tesla because EVs have very low maintenance needs due to their simple drivetrain.
It's just a carryover of the same philosophy used in designing the Model S: leverage every advantage you can of designing an EV.
"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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