3 ms·
You need to know more about an investor's view of the world to figure out whether an investor thinks this is good or bad. Given the capital-intensive nature of
by scott00 11y ago
You need to know more about an investor's view of the world to figure out whether an investor thinks this is good or bad. Given the capital-intensive nature of the business, I think many investors would be expecting TSLA to spend at least some of its lifetime running negative cash-flow (as indeed it as for the last three quarters). Depending on how much investment you see as being required in the future, you may or may not have predicted that they would need additional financing in the future (ie, after your investment). If you did not predict the need for additional financing, this is probably bad news for you. If you did predict it, than what matters most is how the terms of this financing compare to the terms you were expecting. If you think the stock is worth $1000/share, and expected them to do a secondary at some point, you're probably happy they're doing it now as opposed to later, when you suspect the price will be converging to your value. If you thought they would be able to raise all needed capital with 30 year bonds paying 2% interest, you're probably not happy about this.
- kgwgk 11y ago> If you think the stock is worth $1000/share, and expected them to do a secondary at some point, you're probably happy they're doing it now as opposed to later, when you suspect the price will be converging to your value. The only reason I see to be happy with the new shares being issued sooner rather than later is if I'm going to keep buying shares, they won't be diluted because it already happened. Otherwise I don't get why would I prefer the new shares to be issued at a lower price. If they raise $500mn at $250 it will take longer to get to $1000 than if they can wait until the stock trades at $500 (because the dilution would be lower in the second case).