stock will depend on the details... the amount, price, etc. One of my friends noted... I think the only reason the stock held up at all today is because Musk did a 180 on the desire for a capital raise. If he can execute a clean raise with either of his two lead banks – Morgan Stanley and/ or Goldman Sachs – as underwriters, and do it at the market price at the time of the offering, I think it has the potential to have the opposite effect it would have in almost any other company. In any other company, the stock would go down. In Tesla’s case, I think it’s better than a 50/50 that the stock would actually go up – all other things equal. I agree that the stock could jump if Tesla announces that it has issued stock to raise cash, though it’s unclear whether Tesla can do so via traditional means (which typically
the countries in Europe where we get daily sales (registration) data: Norway and The Netherlands. Compared to March, the daily sales rate in Norway in April thus far is down 82%, and in the Netherlands it’s down 76%. For the more expensive and higher-margin Model S and X, Tesla is losing market share to Audi and Jaguar’s electric cars in the most dramatic of ways. Audi e-tron and Jaguar I-PACE are outselling Tesla Model X and S combined by a factor of 5.7 to 1 in Norway, and 9.7 to 1 in the Netherlands. Tesla usually makes up for an April shortfall in the last month of the quarter, but this is a very deep hole from which Tesla now has to dig. A few days later, he e-mailed me, “Fun fact from Norway today: Tesla registered 1 (one!) Model 3 car. Volkswagen registered 148 electric Golfs. Tesla’s market share is dropping like landlines versus cell phones among 22-year-olds.” WHY AREN’T TESLA SHARES DOWN MORE ? In light of the terrible quarter and increasing evidence of lagging demand, why isn’t the stock down even more? Here are a few reasons... NOT ENOUGH CAPITAL It’s clear to everyone – even the bulls – that Tesla desperately needs to raise capital. Musk stubbornly resisted... until April’s call, when he finally acknowledged, “I think there’s merit to the idea of raising capital at this point.” Whether a capital raise helps or hurts the
requires SEC approval).* Normally, this would be routine for a company that still has a $41 billion market cap today, but given the SEC’s contempt of court motion against him – and that Musk has repeatedly stuck his finger in the SEC’s eye – it’s hard to imagine it approving anything Tesla-related right now. For proof, consider the repeated delays in Tesla’s $218 million acquisition of battery supplier Maxwell Technologies.
* EDITOR’S NOTE: Whitney and his friend were right. Earlier this month, Tesla skirted the SEC with a dubious but legal convertible bond offer. In the end, the company raised $2.4 billion, but paid a steep price to do it. The details are a bit complicated for the pages of American Consequences , but Whitney does a great job explaining things here.]
American Consequences
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