Tesla Motors Inc. (TSLA) shares are trading near a 52-week high of $40, and the stock surged on Monday, March 25th, from what appears to be a "teaser" from the CEO.
As one recent Seeking Alpha article points out, a recent tweet from Elon Musk reportedly stated that a "really exciting" announcement was coming and "Am going to put my money where my mouth is in v major way." This is a rather curious way to communicate with shareholders or the market as it leads to speculation as to what he exactly means.
I believe that the most reasonable way to interpret this message might be to think that Tesla could announce a secondary offering in order to further expand production of the recently launched Model "S" and possibly develop other products. Proceeds from a secondary offering could also be used to pay down a loan from the Department of Energy. The company is planning to develop a sport utility vehicle called the Model "X" and that could require funding as well. All of this could be "really exciting" for Elon Musk, and he might be planning to put his money where his mouth is, by buying more shares of Tesla, if a secondary offering is announced soon.
Elon Musk has purchased Tesla shares in the past and the company has raised capital in order to fund losses. The company reported fourth quarter revenues of $306 million, and a loss of $89.9 million or 79 cents per share. For the full-year, the company had $413 million in revenues and a loss of $396 million, or $3.69 per share. That is a major loss especially when you consider it is nearly equivalent to the annual revenues in 2012, although analysts expect the company to be slightly profitable in 2013.
Elon Musk is brilliant, although I have major concerns as to the risks investors are taking when buying Tesla shares. If this was his way to get investors excited about a secondary offering, he succeeded in creating "buzz" that took the shares higher, at least for now. Many stocks drop when a secondary offering is announced, so if that is what Tesla announces, it better be followed up with other news to keep this stock at lofty levels.
Key Data Points For Tesla From Yahoo Finance:
Current Share Price: $37.53
52-Week Range: $25.52 to $40
2013 Earnings Estimate: a profit of 1 cent per share
2014 Earnings Estimate: a profit of $1.30 per share
Data is sourced from Yahoo Finance. No guarantees or representations are made. Please consult a financial advisor before making investments.