Why Tesla Inc (TSLA) Stock Holders Shouldn't Sweat New Debt

Share

Tesla said Monday plans to raise $1.5 billion in corporate bonds - debt - to help fund its new Model 3 electric vehicle and other needs.

In regards to the newly standard features, Tesla has now rolled the Premium Package in as standard on the Model S P100D and Model X P100D. Vetr upgraded shares of Tesla from a "strong sell" rating to a "sell" rating and set a $335.62 price target on the stock in a report on Tuesday, June 13th. This is key to the company's short-term customer relations and long-term survival, as the Model 3 is now amassing some 1,800 reservations per day.

However, the company is facing a major challenge in the "considerable execution risks associated with the rapid ramp up in production of a totally new vehicle", he said.

The automaker's debt load increased significantly a year ago when it bought solar panel maker SolarCity.

Elon Musk has thanked his management team for pulling him "back from the cliff of insanity", and encouraging him to design the upcoming Tesla Model Y on the same platform as the newly-launched Model 3.

China blames U.S. for North Korea missile crisis
Traditionally, the U.S. and China have negotiated sanctions on North Korea before formally involving other council members. That underlines the need for the U.S. to act fast to stem North Korea's acquisition of expertise to achieve that.

Tesla also is involved in installing solar-paneled roofs and producing batteries that can store the energy and power homes.

Tesla said last week that it had 455,000 net pre-orders for the Model 3, which has a $35,000 base price, and that the sedan was averaging 1,800 reservations per day since it launched late last month. Tesla's revenue was up 119.6% compared to the same quarter previous year. Not long after Tesla was founded in 2003, Musk said the plan was to use money from high-end electric vehicles to create more affordable offerings to make the technology the new automotive norm.

Musk says they are building the highly anticipated vehicle as fast as possible - 5,000 units/week as of right now with a goal of 10,000 units/week by the end of 2018.

The notes announced Monday would mature in 2025, though Tesla did not disclose interest rates or other terms of the securities. Revenue more than doubled to $2.8 billion, also beating Wall Street's forecast of $2.5 billion. "Tesla's a company that's always on to the next big innovation or the next big advancement and they raise money well in advance of when the public finds out about that". CEO Elon Musk acknowledged on the earnings call that the company may look to raise capital, but was not considering an equity raise.

Goldman Sachs, Morgan Stanley, Barclays, Bank of America Merrill Lynch, Citigroup, Deutsche Bank and RBC are the book-runners on the bond offering, IFR reported. Equities analysts predict that Tesla will post ($6.23) earnings per share for the current fiscal year.

Share