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Published on May 4, 2019 |
by Steve Hanley
May 4, 2019 by Steve Hanley
After Tesla's last call for results, some stock analysts and short sellers started singing from the songbook "Is not it awful". "We were right from the beginning. Tesla is on the brink of bankruptcy. Tesla and Elon Musk will finally have the stamp they deserve so richly! This is how the now familiar chorus goes. When Tesla said that she could raise up to $ 2 billion in new funds, the yells of misery resulted in a crescendo of near-hysteria.
Back in the real world, where real investors make decisions based on real facts, not emotions, things went well last week. Tesla proposed a mix of banknotes and convertible notes. Wall Street swallowed them up and asked for more. according to ArsTechnica, it sold $ 737 million of shares and $ 1.6 billion of convertible bonds worth $ 2.34 billion. The underwriters will have the option of buying $ 350 million of additional stock and debt over the next month.
Another sign that the investment community as a whole is not too worried about the viability of Tesla, its shares rose 4% Thursday and 4.5% Friday after the announcement of the capital increase. Generally, when a company sells more shares, the price drops because there is now a bigger cake to share for all investors.
The convertible notes give lenders the opportunity to acquire shares of the company rather than cash at the end of the term, in May 2024. The new convertible notes have an exercise price of 309.83 USD, 27% more than the official selling price of 243 USD. modest interest rate of 2%. The last convertible notes sold by the company in 2017 had an interest rate of 2.375%.
With the sale of new shares and convertible notes now complete, Tesla has close to $ 4 billion in cash that allows it to move forward with its plan to bring Y models into production. and Tesla Semi. "The Wall Street confidence demonstration could also give Tesla some leeway in another way," he says. ArsTechnica.
"Over the past year, some critics have warned that Tesla is becoming so difficult that it may have trouble raising money and being forced into bankruptcy. This week's strong fundraising shows clearly that this thesis was false. Tesla may or may not become the big and profitable car company that Elon Musk is trying to create. But if Tesla fails, it will not be because of short-term cash flow problems. "
Phew! Now that Tesla has once again avoided the sea ice, it is time to resume the important work of diverting the world from fossil fuels. There's no time to lose.
About the author
Steve Hanley Steve writes about the interface between technology and sustainability from his home in Rhode Island and wherever the singularity could lead him. His motto is: "Life is not measured by how many breaths we take, but the number of moments that take our breath away!" You can follow him on Google + and on Twitter.
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