Tesla Raises New Capital

elon musk
Elon Musk, © Tesla

Tesla CEO Elon Musk was as eloquent as ever when he raised the targets for the company’s electric car models: Instead of producing 500,000 electric cars (total figure, all models – i.e., Model S, Model X and Model 3) in 2020, the company should already achieve that number in 2018 and increase it to one million in 2020. One can question whether these targets will become reality, as they require even more large infusions of cash, making additional capital increases inevitable. And this although Tesla has just recently sought more money: a gross amount of USD 2.3 billion, to be exact. However, the raised capital needs to be reduced by USD 600 million, money that Musk – as he claimed – needed for tax payments. He also “only” exercised stock options – I suspect with price development remaining in the lower two digits (still, mere speculation at this point).

However, he possesses many more, which add up to over USD 1 billion in total book value and he does not sell Tesla shares from his own stock. Nevertheless, the maneuver again leaves unanswered questions, since he clearly does pull money out of the Tesla venture. The shares he mortgaged for personal loans have not been included yet either.

Hydrogenics

The increase in capital, the previously available cash on hand (more than USD 1.4 billion) and the preorders for Model 3 (370,000 at USD 1,000 prepayment per unit add up to over USD 370 million) will provide the company with …

Another cell supplier

Several rumors have pointed to Tesla seeking a collaboration with …

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Stock market right to be cautious

The development of the share price shows that the stock market may not take the Tesla CEO’s forecasts at face value, as it dropped from above USD 255 to below USD 210 and only went up to USD 220 after the latest capital increase. This could also be just cosmetic surgery, since banks and brokers have a stake in “maintaining” the right share prices. Even more than 400,000 preorders of Model 3 (includes double orders, which is why the figure is 370,000 further above) do not change anything, as these have so far been only options with the intent to purchase (including a money-back guarantee), but aren’t actual sales contracts.

By the way: There are signs that the money from these options was used to …

On a side note: Today’s Model 3 buyers will have to …

Risk warning

Investors must understand that buying and selling shares is done at their own risk. Consider spreading the risk as a sensible precaution. The fuel cell companies mentioned in this article are small and mid-cap ones, i.e., they do not represent stakes in big companies and the volatility is significantly higher. This article is not to be taken as a recommendation of what shares to buy or sell – it comes without any explicit or implicit guarantee or warranty. All information is based on publicly available sources and the assessments put forth in this article represent exclusively the author’s own opinion. This article focuses on mid-term and long-term perspectives and not short-term profit. The author may own shares in any of the companies mentioned in this article.

Author: Sven Jösting (written June 2016)

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