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Tesla Announces $500M Common Stock Offering
- loceng 11y agoIt's going to be fantastic when all synergistic factors are fully in play.
- _xander 11y agoThis is a timely announcement following chatter about Tesla's cash flow problems[1][2]. [1] http://www.scmp.com/business/companies/article/1846965/tesla-shares-fall-wider-loss-ceo-comments-cash-need http://www.scmp.com/business/companies/article/1846965/tesla... [2]Flagged HN thread from 3 days ago: https://news.ycombinator.com/item?id=10030101 https://news.ycombinator.com/item?id=10030101
- kome 11y agoRe-reading the self-delusion of the fanboys is almost funny now.
- dmfdmf 11y agoWhy was that thread "flagged"? What does that mean?
- gamblor956 11y agoThe thread was flagged because the pro-Tesla crowd on HN felt that the article was inaccurate regarding the amount of money Tesla lost on each car, and flagged it over wording. Tesla makes money on each car it sells (sales exceeds cost of goods sold), but once fixed costs and other expenses like R&D and capital investments are included, it has an enormous loss, so on average it loses about $4000 to $17000 per car (depending on whether you use Unicorn Accounting or Generally Accepted Accounting Practices). The article reported this as Tesla losing $4000 per car, which is accurate in a general/layman's sense but is technically inaccurate.
- matthewmcg 11y agoI'm going to have to start using the "unicorn accounting" phrase (vs. GAAP). Love it.
- _yosefk 11y agoIt's nice but it kinda hints that GAAP is "the right thing", which is a bit too optimistic IMO.
- IBM 11y agoFrankly Tesla would be stupid not to issue as much stock as possible when it's trading far above its intrinsic value.
- celticninja 11y agoWhy do you think it is trading far above its intrinsic value? How much is a share currently worth?
- benmanns 11y agoAnd why isn't everyone who knows that shorting it?
- smackfu 11y agoMaybe they are, Tesla has a lot of short interest.
- peteretep 11y agoBecause the market can stay irrational far longer than you can stay solvent... Saying that a share is overvalued against its "intrinsic" value is not saying the share is overvalued or will go down, it's just saying that it's currently being priced with an expectation the company will be worth more in the future.
- kgwgk 11y ago> Saying that a share is overvalued against its "intrinsic" value is not saying the share is overvalued It is exactly what it means [1] > or will go down. The intrinsic value of a lottery ticket is below the price you pay, it doesn't mean you can never win. That said, nobody knows the intrinsic value. In the case of TSLA you have a range of sell-side analysts telling you it's somewhere between $178 and $400. (Edit: to be fair, probably they are using multiples [2] and not a proper intrinsic value calculation. A DCF doesn't get you very far in the current market, much less so in companies like Tesla. For a discussion based on fundamentals see [3]). [1] https://en.wikipedia.org/wiki/Intrinsic_value_(finance) https://en.wikipedia.org/wiki/Intrinsic_value_(finance) [2] https://en.wikipedia.org/wiki/Valuation_using_multiples https://en.wikipedia.org/wiki/Valuation_using_multiples [3] http://aswathdamodaran.blogspot.ch/2014/03/return-to-firing-line-revisiting-tesla.html http://aswathdamodaran.blogspot.ch/2014/03/return-to-firing-...
- blacktulip 11y agoI am not too familiar with financing stuff. So is this a dilution? Does it mean that current shares will be devalued?
- repsilat 11y agoTo first order, current shares should be worth a smaller fraction of the company, but should be worth the same dollar amount as they currently are. This process is meant to increase the size of Tesla by $500M, by simply putting $500M into its bank account. The people who are providing this money are getting new shares in return. In theory, the value of the new shares should be $500M, and the value of the old shares should add up to the old market cap of the company, and the sum of the new shares and the old shares will naturally add up to the company's new market cap. There are second-order effects, though. If there is only a fixed demand for Tesla shares, this may reduce the price of shares (and so devalue the shares of existing shareholders.) Conversely, if people think that Tesla is going to make very good use of any new money, then existing shareholders may end up better off.
- wslh 11y ago> To first order, current shares should be worth a smaller fraction of the company, but should be worth the same dollar amount as they currently are. Is this fair? I mean, you lose power because you have less shares. The share price is only part of the investing story.
- deleted 11y ago[deleted]
- robbiep 11y agoIt's how it has always worked. If you already own x percent of the company (a sizeable enough percentage to influence voting) then you buy in. You probably were a shareholder consulted about the plan anyway. If you weren't, your shares are still worth the same amount, so even though your voting percentage has gone down you still have the same value of stock, so it shouldn't affect you materially anyway.
- deleted 11y ago[deleted]
- tdees40 11y agoSo here's a thought. If I have lots of businesses with a high chance of failure, and I bring them under one roof, any one business is more likely to destroy my entire company. So if I have two high-risk businesses (electric cars and energy storage) having both in the same company greatly increase the total company's chance of insolvency and failure. On a higher level, I LOVE Elon Musk, but what made Steve Jobs so great is that he could innovate like crazy and make gobs of cash. Right now, Elon is innovating, but his companies are really struggling to even sniff profitability.
- JoeAltmaier 11y agoWait - that strategy worked for Wall Street, didn't it? Putting lots of worthless mortgages in one basket creates a triple-A rating!
- ojbyrne 11y agoI don't think your argument is correct. That is the whole point of portfolio theory: 1. https://en.wikipedia.org/wiki/Modern_portfolio_theory https://en.wikipedia.org/wiki/Modern_portfolio_theory
- deleted 11y ago[deleted]
- tdees40 11y agoLet me tighten up my argument a bit. Assume two businesses with an 80% chance of success, where success is worth $1000, and a 20% chance of failure, where failure is worth -$2000. But of course these are stocks, so they can't be worth less than zero, so the expected value of each is $800. But the expected value of the combined company (where all outcomes are floored at zero) is only $1280 (not $1600), because there's a real chance that one business blows through the profits of the other.
- mikeash 11y agoLooking at it from another perspective, this is exactly why you want to incorporate if you start a business, instead of just going as a sole proprietorship. That way you have two entities (your person and your business) and if one fails (your business goes under) the assets of the other are protected (they can't take your house).
- cpplinuxdude 11y agoI feel like buying some stock in Tesla to make a contribution toward our future, not in the hopes of making money. If these shares make money, that will be a bonus.
- Yuioup 11y agoSomehow I am skeptical that you actually believe this.
- abledon 11y agoSome people just roll Lawful-Good in life
- JonFish85 11y agoIf that's the case, this is the rare case for your money to actually go to the company. Unless you're buying shares "directly" from the company (ignoring the middle-man for now), the company never sees your money. So if you want to do that, now's the time (or if you think they'll have another public offering in the future, wait, I guess).
- melling 11y agoYeah me too, but not really. You make absolutely no difference when you buy a few shares of stock. Can you buy the car? I believe consumers can make a big difference by helping new technologies. (e.g buy LED lights, hybrids, EV's). We can also help by supporting Kickstarter projects that make a difference. VR was Kickstarted. Maybe home solar or robotics will be next.
- toomuchtodo 11y agoI've ordered a Model X not because I need a fancy car, but to contribute towards Tesla revenue (I've been saving up specifically for this since I bought Tesla stock when they IPOd years ago).
- zardo 11y agoYeah me too, but not really. You make absolutely no difference when you buy a few shares of stock. Your shares matter in proportion, it may be a small number, but it isn't zero. A hundred thousand one dollar bills are worth just as much as a 100,000 dollar check, you can't just round the dollar bills down to zero.
- jonknee 11y agoThese sort of things can spook investors, but Elon purchased $20M of the offering himself as a show of good faith. That's a big insider buy! TSLA is currently trading up 2.5% so apparently it was also quite a convincing play.
- billiam 11y agoTo me, that it worked so easily says a lot about the people holding TSLA.
- forgetsusername 11y ago$20MM USD is about half a percent of Mr. Musk's holdings... TSLA is like Bitcoin; no news is bad news.
- krampian 11y agoThose of us who were investors in bank stocks back in 2008 saw alot of large insider buys, including multi-million ones, from CEOs and top execs looking to reassure investors. In most cases it simply didn't work. Fundamentals rule sooner or later, not optics. I was in the no-longer extant Wachovia for instance, where the CEO bought around $1m of stock. It was bought out for a song a few months later after it crashed.
- cwt137 11y agoWith Tesla loosing $4,000 per car[1], and they are on track to produce 50,000 cars this year, you knew they had to raise money sooner or later. [1] http://www.cnbc.com/2015/08/10/tesla-burns-cash-loses-more-than-4000-on-every-car-sold.html http://www.cnbc.com/2015/08/10/tesla-burns-cash-loses-more-t... [2] http://www.bloomberg.com/news/articles/2015-08-05/tesla-falls-after-lowering-sales-goal-to-as-few-as-50-000-autos http://www.bloomberg.com/news/articles/2015-08-05/tesla-fall...
- dtparr 11y agoAgain, they're not losing $4000 per car in the sense that their cost to produce one car is $4000 more than what they're selling for. (Meaning if they sold 50k more cars, they'd lose $200M) They had significant CapEx and so their revenues - costs worked out to an amount that was $4000 for every car they did sell. Had they sold more, their net loss would have been less, not more.
- hughes 11y agoWith all the headlines about the $4000 figure the last few days, I was completely mislead about what that actually meant. Thanks for explaining it.
- dtparr 11y agoYeah, for whatever reason that headline stuck even on sites that are typically less click-baity and/or pro-Tesla. My favorite way I saw the headline explained was something like: I had major medical expenses this year and had to dip into my savings such that I ended up spending about 12k more than I brought in this year. I also ate 12 pizzas in the year. Their headline is like me saying "I lost $1k per pizza this year". It's accurate in a sense, but they're not related.
- conistonwater 11y agoAccording to your [1], their GAAP operating loss per vehicle is $14,758.
- dtparr 11y agoSo how do secondary offerings work, practically speaking? They've named the amount they want to raise, not a number of shares. So do they wait until trading closes one day, issue how many shares they need to to make that work out to $500M and then sell it to people who've "registered" to purchase $X of it? And then when the market starts the next day there's just an extra $500M in market cap but all the shares trade similarly?
- sparaker 11y agoThat is one way to do it, but i don't think they can trade the shares similarly at least not this way.
- _pmf_ 11y agoAny decent OEM can currently buy Tesla with spare change. It's criminally undervaluated.
- seunosewa 11y agoIt's a financial blunder to sell new shares at a 'criminally' low price, so maybe that isn't true.
- crimsonalucard 11y agoAnybody have an opinion on tesla stock? Are they overvalued or undervalued? How are there fundamentals?
- noipv4 11y agoThey just mass emailed Model S customers to reduce Super Charging. https://i.imgur.com/ruKYVHF.png https://i.imgur.com/ruKYVHF.png http://www.teslamotorsclub.com/showthread.php/51482-Supercharging-letter-from-Tesla-2015-8-13 http://www.teslamotorsclub.com/showthread.php/51482-Supercha...
- jedmeyers 11y agoI expected the worst - for it to be due to technical issue with the batteries, however it looks like it is mostly related to the Superchargers being congested and not available immediately to everyone in need of charging.
- brianwawok 11y agoSure it depends on the region. I live in the Midwest along the supercharge path. The mall by me has 3 or 4 supercharge stations, which I think is approximately 4x the number of teslas owners living in my city. About half the time all 4 stalls are empty, about half the time I see 1 car. Which is "good" in that people on a long trip can get their charge on without having to wait in line. I suspect if I lived in town and drove a Tesla, I would use it a little more often for the free power ;) Maybe just adding a $5 charge cost would be enough to balance out supply and demand? $5 a tank is still a good deal on a long trip, but hardly worth going out of my way to do (when I can charge for $2 at home)
- takeda 11y agoThey have been doing this for a while now. Either you recently used super chargers too much our they made a mistake and sent it to you.
- 27182818284 11y agoSeeing this is very disheartening to folks like me that really gush over Tesla and see free solar-powered superchargers as a bright future :-/ This is above anything else I've seen about Tesla ever bums me out the most. It is like getting "unlimited" data to find out that you're actually punished at more than 2 GB. It is super lame behavior.