Shares of Tesla Motors (TSLA) rip 12.9% higher premarket to $95.75 after the company files its...


Shares of Tesla Motors (TSLA) rip 12.9% higher premarket to $95.75 after the company files its mixed shelf and Elon Musk pours in some more capital. Reality check: Tesla now trades with a market cap just under 20% of Ford's valuation while selling only a fraction of the cars Ford sells indicating investors are betting either Tesla will become a "major" automaker or claim the highest margins in the industry.

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Comments (23)
  • wavestock.com
    , contributor
    Comments (35) | Send Message
     
    Very smart this Mr. Musk !
    16 May 2013, 08:27 AM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    Ha, I am sorry, I freaking love Tesla, but how does a secondary offering, diluting the shares by 8% (800M/10B) increase share price by 12%? What am I missing?

     

    Musk already owns 30% of the shares at 115 million shares, this will actually lower the overall percentage of the business owned by Musk, so I don't see how him buying $100M is that great of a thing.
    16 May 2013, 08:30 AM Reply Like
  • dennisg13
    , contributor
    Comments (129) | Send Message
     
    Less than half of the money is from new stock, so the dilution is minimum. The funds will pay off the DOE energy loan which will be a huge mental/emotional lift for the company. Do you see how many people rip on Tesla about "getting govt handouts?" The naysayers won't have that anymore.
    The company currently has little cash on hand. The extra funds will buffer any setbacks and can finance the new charging stations or the tooling for the model X.
    In reality this is just another step in showing that this company is here to stay and will thrive.
    16 May 2013, 09:14 AM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    I do agree that it is a positive to pay back to govt loan because the insane number of people who only hate the company because they took "handouts" but these reasons still don't seem significant enough to reverse any dilution at all into a 12% gain.

     

    But then again, I still think the stock is worth $60 so I must just be CRAZY.
    16 May 2013, 09:18 AM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    And by CRAZY I mean, I just look at fundamentals and weigh them way more than emotions, which I would say is driving this huge rally.
    16 May 2013, 09:19 AM Reply Like
  • Ted Bear
    , contributor
    Comments (704) | Send Message
     
    Some things defy logic...and gravity...until they do.

     

    What's it worth five years from now? Struggles to turn a modest profit? Shares will be trading for five bucks or so.

     

    But for now, it is all laughs and giggles.

     

    BTW, i am VERY pleased that someone finally put together a decent electric automobile. Why Ford, GM or Toyota couldn't do this on a scale which pleased the broad market is another of those incredible mysteries of which life seems to be littered.
    16 May 2013, 08:32 AM Reply Like
  • ajmcgold
    , contributor
    Comments (96) | Send Message
     
    Why a large bureaucratic company couldn't innovate is a mystery?

     

    I'm mystified when they DO!!
    16 May 2013, 08:45 AM Reply Like
  • jimr1
    , contributor
    Comments (112) | Send Message
     
    Tesla is dramatically different than a "car" company. By rethinking transportation from the ground up, it has created technological leadership. By eliminating car dealers, it has both brought the car buying experience into this 21st century, but had helped make high margins possible. IF the hinted at 500 mile range battery arrives in a few years, and if the mich cheaper Gen 3 Tesla project is as successful as the Model S, Tesla could redefine the industry in ways that could make Ford,GM, and Toyota look like Kodak and Polaroid.
    16 May 2013, 08:37 AM Reply Like
  • MishaF
    , contributor
    Comments (29) | Send Message
     
    This is just silly.
    16 May 2013, 08:55 AM Reply Like
  • Jonas Weil
    , contributor
    Comments (15) | Send Message
     
    Seems to me that building the "Supercharger" network is more
    important than "pumping the stock." Analogy: while dealing with
    IRS, Benghazi, AP wiretapping consumes Washington, what is
    the administration doing about upgrading worker skills or job creation-letting the net number of new jobs created happen by itself?
    16 May 2013, 08:59 AM Reply Like
  • Rookie IRA Investor
    , contributor
    Comments (2874) | Send Message
     
    "... indicating investors are betting either Tesla will become a "major" automaker or claim the highest margins in the industry."

     

    Or both. TSLA is obviously a bit of a cult stock at the moment and many longs are hoping for an AMZN type of phenomenon. Most likely the excitement will die down eventually, but the stock might go much higher first. We will see. A few years down the road when TSLA are churning out millions of vans, trucks, and buses, and has created thousands of millionaires, maybe we will remember we could have bought in for less than $100.

     

    Or maybe we will vaguely recall how TSLA once almost reached $100.
    16 May 2013, 09:14 AM Reply Like
  • donabalone
    , contributor
    Comments (14) | Send Message
     
    Tesla is good at defying gravity. Maybe the hover car is next? The worship of Mr. Musk reminds me of North Korea. Far from being the next Steve Jobs, he is the next P.T. Barnum. Terms like "pump and dump" and "pyramid scheme" come to mind.
    16 May 2013, 09:26 AM Reply Like
  • 123man
    , contributor
    Comments (1625) | Send Message
     
    bbor - your not crazy, you most likely haven't driven one - and donabolone - you most likely are - owning a Model S is a "lifestyle adventure" and when you are older, adventures are hard to come by -
    16 May 2013, 09:38 AM Reply Like
  • donabalone
    , contributor
    Comments (14) | Send Message
     
    Nobody is denying the fact that Tesla has a great product, but it is only for the few who want and can afford one, and nobody is denying the fact that they have defied the odds by staying in business, or that they run a smart business. The fact is that the value of the stock does not come near to the price of the stock, by any measure, and anyone who says so here has been called every name in the book. This is a financial blog, not Facebook. People are acting so juvenile.
    16 May 2013, 11:06 AM Reply Like
  • Esekla
    , contributor
    Comments (4665) | Send Message
     
    Yes, to all those noting the insanity, but it's pointless to argue valuation. This is a short squeeze plain and simple. The pricing has nothing to do with the company's business and everything to do with market manipulation: big money forces the price up, particularly in the AH and premarket, then tries to correlate exit sales to force covering. I'm very glad I took a relatively small loss on my short the moment I saw earnings come out. The fanatical fan-base doesn't help, either.

     

    My article, Tesla's Matrix Moment, was meant as a fairly neutral piece of entertaining reading on the troubles that success will bring for Tesla, but of course it was largely blasted for for containing any negativity:

     

    http://seekingalpha.co...

     

    At least I called the dilution event correctly, despite Musk's comments to the contrary just a week ago. None of that outweighs the short squeeze, though. Just stay away until big money is done with it's frickin poker game.
    16 May 2013, 09:40 AM Reply Like
  • PeterJA
    , contributor
    Comments (5587) | Send Message
     
    Esekia:

     

    "big money forces the price up, particularly in the AH and premarket, then tries to correlate exit sales to force covering."

     

    If you want to explain things to us, would you please explain what this is and how it is done?

     

    "Just stay away until big money is done with it's frickin poker game."

     

    How will we know when that is? Thanks.
    16 May 2013, 11:38 AM Reply Like
  • Esekla
    , contributor
    Comments (4665) | Send Message
     
    Sure Pete,
    Hopefully you already know that short shares have theoretically unlimited risk, since there is no limit to how high a stock can be priced. The broker is ultimately on the hook for that, and since they don't want to be stuck holding the bill on a bad position, they will force the shares to be bought back if loss looks like it could exceed the client's available capital. This is how an unreasonably high share price can force a buy, leading to an even higher price and becoming a cycle called a short squeeze, whenever their is a high percentage of shares held short.
    Investment banks get hefty sums for managing these stock sales. Driving prices outside market hours is fairly easy because of the light volume. They know the announcements are coming before the public, so they can use options to have hedges in place beforehand, thereby mitigating their risk. Companies like Data Explorers provide daily information on short positions which is not available to retail investors. Which speaks to your second question...
    You won't know until after it's over. The most accurate info is the short data published by the exchanges on a bi-monthly basis, 3 days after the fact. Some of us can check the rebate rate (the cost to borrow shares for shorting) and that's a reasonable proxy. There was an attempt to reform the markets and have them publish daily short data (Reg SHO), but vested interests made sure that what was actually published wound up being completely unusable:

     

    http://1.usa.gov/147W8hR

     

    Cheers! :-/
    16 May 2013, 01:12 PM Reply Like
  • PeterJA
    , contributor
    Comments (5587) | Send Message
     
    Esekia: Thank you sir. Followup questions:

     

    Yesterday before the Offering announcement, members here said shorts seemed to be accumulating again. I presume that the Offering will make it harder to squeeze them, because of the increased availability of stock to borrow.

     

    Elon says he will announce more good news in the next few weeks. Do you think the short squeeze will continue? How high will the price go before the poker game is over? And then how far will it drop?

     

    Love to hear your thoughts.
    16 May 2013, 01:35 PM Reply Like
  • Esekla
    , contributor
    Comments (4665) | Send Message
     
    Hi Pete,
    While the recent stock offering technically provides more availability for the shorts and dilutes the long, I think the actual impact is trivial. What really matters is the relative finances on each side.
    Yes, I'd guess the squeeze will continue for a while (weeks?), but that doesn't necessarily mean TSLA's price will continue to elevate. The low-hanging fruit has probably already been seized, and the rebate rate is dropping over the past several days. That said, my guess could be completely wrong, and I wouldn't really care if it is. Who knows what Musk will say next week? He's certainly a great salesman, and those amongst the fan(atical)-base don't seen constrained by any quantifiable valuation metrics. Certainly more shorts trying to game the system and then getting burned could drive the price higher.
    Like I said, it seems pretty clear that the best course is to just stay away until we're into the summer, and some perspective related to the actual business of selling cars and batteries has returned.
    16 May 2013, 03:04 PM Reply Like
  • Van Hyder
    , contributor
    Comments (172) | Send Message
     
    Anyone else see this as a pre-SpaceX ipo move on Musk part? Meaning $100MM of his cash is less significant to him if he's about to free up some of his trapped equity in the the other business that occupies his time. Plus there's no better time to ask every regulatory agency (state and federal) for approvals for his new launch site when you're carrying a large cardboard type check.
    16 May 2013, 09:59 AM Reply Like
  • Vico Confino
    , contributor
    Comments (249) | Send Message
     
    Great story about N. Tesla.
    History repeats itself for Elon Musk.
    Order a copy from half.com You will love it.

     

    Tesla : Man Out of Time by Margaret Cheney (1990, Hardcover)

     

    (Hardcover, 1990) Other Editions...

     

    Author: Margaret Cheney

     

    More Details

     

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    Format: Hardcover
    ISBN-10: 0880294191
    ISBN-13: 9780880294195
    Publisher: Dorset Press320 pages
    Reprints Ser.Language: English
    16 May 2013, 03:52 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (7078) | Send Message
     
    "Tesla now trades with a market cap just under 20% of Ford's valuation while selling only a fraction of the cars Ford sells..."

     

    Yup, exactly my point I posted yesterday.
    16 May 2013, 05:47 PM Reply Like
  • 123man
    , contributor
    Comments (1625) | Send Message
     
    Not sure what the point is - one is a Ford, the other is a Tesla - showed my Ford owning friend my Tesla on Friday - on Monday he told me he bought a Tesla over the weekend - doesn't matter if he keeps his Ford - fact is Tesla just made another 25% profit - huuraah
    17 May 2013, 12:03 PM Reply Like
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