Short-Term TSLA Price Movements - 2013

[deonb]

Noob question here...

So he stock is up almost $5 right now in AH, ostensibly because Tesla filed paperwork to sell more stock.

Is the stock up because the news that Tesla will have a bigger war chest of cash is seen as a positive that outweighs the downside that this will cause some dilution of the existing shares?

Also the confidence that Elon has in grabbing $100 mil of that himself. That's fairly unprecedented for a CEO.

 

[gg_got_a_tesla]

Email from Tesla Investor Relations:

Tesla Motors Announces Offerings of Common Stock and Convertible Senior Notes

Elon Musk to Lead Common Stock Offering; Tesla Intends to Pay Off Department of Energy Loan With Interest

PALO ALTO, CA -- (Marketwired) -- 05/15/13 -- Tesla Motors, Inc. (NASDAQ: TSLA) announced today offerings of 2,703,027 shares of common stock and $450 million aggregate principal amount of convertible senior notes due 2018 in concurrent underwritten registered public offerings. In addition, Tesla has granted the underwriters a 30-day option to purchase up to an additional 405,454 shares of common stock and $67.5 million in aggregate principal amount of the notes.

In addition, Elon Musk, Tesla's chief executive officer and cofounder, intends to purchase shares of common stock at the same public offering price for an aggregate purchase price of $100 million. Of this amount, approximately $45 million would be purchased in the common stock offering, and approximately $55 million would be purchased directly from Tesla in a subsequent private placement due to the waiting period requirements of the Hart-Scott-Rodino Act.

The aggregate gross proceeds of the offerings, including the options granted to the underwriters, and the private placement is expected to be approximately $830 million. Tesla intends to use the net proceeds from the offerings to prepay Tesla's outstanding loan from the United States Department of Energy, pay the cost of convertible note hedge transactions and for general corporate purposes.

The notes will be convertible into cash and, if applicable, shares of Tesla's common stock. The interest rate, conversion price and other terms of the notes are to be determined.

In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes.

Goldman, Sachs & Co. is acting as sole book-running manager for the offering of common stock. Goldman, Sachs & Co., Morgan Stanley and J.P. Morgan are acting as joint book-running managers for the notes offering.

An effective registration statement relating to the securities was filed with the Securities and Exchange Commission on May 15, 2013. The offering of these securities will be made only by means of prospectus supplements and the accompanying prospectus. Copies of the final prospectus supplements and accompanying prospectus may be obtained from Goldman, Sachs & Co., via telephone: (866) 471-2526; facsimile: (212) 902-9316; email: [email protected]; or standard mail at Goldman, Sachs & Co., Attn: Prospectus Department, 200 West Street, New York, NY 10282-2198; from Morgan Stanley & Co. LLC, Attn: Prospectus Department, 180 Varick Street, Second Floor, New York, NY 10014, or by telephone at (866) 718-1649 or email: [email protected]; or from J.P. Morgan Securities LLC, via telephone: (866) 803-9204; or standard mail at c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717.

 

[gregincal]

Noob question here...

So he stock is up almost $5 right now in AH, ostensibly because Tesla filed paperwork to sell more stock.

Is the stock up because the news that Tesla will have a bigger war chest of cash is seen as a positive that outweighs the downside that this will cause some dilution of the existing shares?

That's my guess. Knowledgeable people on this board thought it was a good idea. Apparently the market does as well.

 

[Don Shin]

More details:

More on Tesla: The company announces it's... - Seeking Alpha

 

[StapleGun]

Tesla intends to use the net proceeds from the offerings to prepay Tesla's outstanding loan from the United States Department of Energy, pay the cost of convertible note hedge transactions and for general corporate purposes.

Looks like they're paying off the loan early.

 

[Curt Renz]

Doesn't make any sense, usually issuing additional shares results in dilution.
Could be a reaction from the shorts, they are shorting additionl shares in after hours trading...

Shorting is selling, which is likely to push shares downward. That doesn't seem to be a feature in today's after hours trading. It's more likely that some shorts are covering (buying).

As I've been saying, a subsequent offering would imply a need to ramp up production to meet demand inspired by new financing and servicing plans along with accolades from Consumer Reports. This could indicate a business that is really going to become a big player in the automobile industry and cause investors to overlook concern about dilution.

 

[EarlyAdopter]

Let's not forget that last time Tesla did a secondary offering, last October at $28 to the tune of 8 million shares, a dilution of roughly 8%, the stock went up, not down.

 

[GasDoc]

In addition, Elon Musk, Tesla's chief executive officer and cofounder, intends to purchase shares of common stock at the same public offering price for an aggregate purchase price of $100 million. Of this amount, approximately $45 million would be purchased in the common stock offering, and approximately $55 million would be purchased directly from Tesla in a subsequent private placement due to the waiting period requirements of the Hart-Scott-Rodino Act.

Now THAT's putting your money where your mouth is!

 

[mitch672]

Looks like they're paying off the loan early.

Makes sense, and Obama can have a success story on the loan program. Also allows Tesla to be acquired or sold now (that was not allowed under the loan), it also insulates tesla if there is a global slowdown/depression...

 

[30seconds]

this also will allow institutional investors to directly purchase large blocks - $10 or $15m increments. This will likely lead to overall increase in longer term institutional holders. very positive.

 

[Don Shin]

At 92 in AH trading. So what say you all: is this fuel for another fresh short squeeze? :tongue:

 

[Johan]

In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes.

Please someone explain this part to me?

 

[c041v]

$90.00+ right now in AH. I was getting a bit uncomfortable in the low 80's, but after doing a lot of reading and considering everyone's sound reasoning on this board, I increased my position (at $81.76) knowing that the best was yet to come.

Seatbelt is fastened.

 

[toastypasta]

How do i get in on these convertible notes?

 

[dm33]

Makes sense, and Obama can have a success story on the loan program. Also allows Tesla to be acquired or sold now (that was not allowed under the loan), it also insulates tesla if there is a global slowdown/depression...

What would happen to the stock price is Tesla gets acquired? Does that mean Elon would move on to focus on SpaceX?

 

[GasDoc]

So did Elon's net worth just go up by $184M since the market close on the news that he was investing $100M?

Nice! It's good to be Elon!

 

[Johan]

What would happen to the stock price is Tesla gets acquired? Does that mean Elon would move on to focus on SpaceX?

I hope this doesn't happen for a few years... We need Elon in the cockpit!

So did Elon's net worth just go up by $184M since the market close on the news that he was investing $100M?

Nice! It's good to be Elon!

He's a P.I.M.P.

 

[c041v]

So did Elon's net worth just go up by $184M since the market close on the news that he was investing $100M?

Nice! It's good to be Elon!

He didn't even need to tweet.

 

[mitch672]

What would happen to the stock price is Tesla gets acquired? Does that mean Elon would move on to focus on SpaceX?

I don't think TSLA will be acquired, yet. In the event of an acquisition, it would really depend on IFF (If and Only If) Elon was staying on.. If he was to stay, the price would likely go up, if he where to leave, disaster. I don't think he's ready to fly off to a Mars quite yet, now in 5-7 years, sure.

 

[bollar]

Makes sense, and Obama can have a success story on the loan program. Also allows Tesla to be acquired or sold now (that was not allowed under the loan), it also insulates tesla if there is a global slowdown/depression...

So long as Obama shares the credit with Bush, I'm okay with that.