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Elon Musk to buy $100 million in Tesla stock as part of secondary offering

Any smart people care to explain what this means? Expect stock prices to go down/up?

@cgiGuy stock went up 8-10 points after this news hit in after hours trading. It should be received as positive news, but some could definitely perceive it as negative (Elon is having to go out of pocket to keep things going, etc...which isn't true). Paying off the loan is hugely positive and more capital is generally equally as positive.

Elon is feeling very confident! And rightly so!

So who got this one spot on in the rumor mill leading up to today?

Stock is up to 89 in after hours. I think this will mostly be viewed positively. First, they shed the DOE loan which stops the Solyndra comparisons and shuts up the Sara Palin's of the world. The biggest positive in this is that they now have several hundred million dollars to increase the infrastructure (supercharger network, service centers, factory, etc.) quicker and ramp up R&D to speed the Gen III car to market.

The only negative aspect is dilution, meaning there are now more shares of stock out there that we have to share future earnings with.

Ok, so the dilution is only a few percent, but what does this mean: "Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price"? Does that counteract the dilution somehow? Any experts?

Convertible Hedge
A position in which one owns a convertible bond in a publicly-traded company while also selling short the common stock in the same company. The idea behind a convertible hedge is to profit regardless of whether the common stock increases or decreases in price. If the stock goes up, the investor loses on the short sale, but can profit by exercising the conversion option on the bond and selling the underlying stock. If the stock goes down, the investor profits from the short sale and does not exercise the conversion option, keeping the coupon payments from the bond.

Will this senior convertible note sale offer additional interest payment tax deductions? Will this effectively lower TSLA's weighted average cost of capital?

MBAs... where are you???

Generally speaking, companies will sell more shelf stock when the price is high. This is really the only way for the company to get money based on the sale of stock. After paying off the gov, they should have money left over to invest in facilities, r&d, service, etc. This should be viewed as a real positive in that current features, model x, and genIII will be available sooner and service should improve.

Issuing stock dilutes the per share value, but convertibles increase the per share value until converted and so should be non dilutive

Wouldn't be surprised if they get a new shift on MS line soon. If the internal metrics on demand are right, they'll exceed the 4500 north american estimates and bump up the European numbers delivered. Revenues need a boost due to 40's delivered and possibly the effects of euro sig reservation payments coming off the books (not sure when they will be delivered, if they will be delivered in Q2.)

European deliveries are to be spread out thru 2013, according to the due dates given customers.

I really don't see how TM doesn't blow way past 21,000 total this year. 4750 Q1, 5000 Eur., leaves only 11,250 for US Q2+3+4. Seems very low, only 3750/quarter. I'd expect a minimum of 1,000 to 1,250/quarter above that.

^ - assuming US demand doesn't decrease ...

+1 BrianH

Sorry, but I'm really new to stocks and don't fully understand all the implications of this announcement. Does this mean EM believes TSLA is worth $85/share? And that I was an idiot for not buying at 35, and again at 45, and then again at 55, and then yet again at 75?

Not exactly. Any asset, whether stock, bond, commodity or real estate that goes parabolic will (at some point) decrease to the beginning of the rise. Therefore the $35-45 range will most likely be revisited and give people like you and me another great entry price.

The problem is....Timing... You never know when it will happen and if it can actually come down to the $45 level...Especially if it goes to 200-300 first!

Put 10k in and be up million in 10yrs ')

What is Elon outlook 1yr 3yr 10yr 20yrs ?

@church70, Elon is headed to Mars. I doubt he will care.

We will have the Model UFO in 10 yrs LOL with Elon

@keichlor. Thanks, and here's hoping!

They said the price per share would be announced after market close today. Any word on that? I haven't seen anything about it.

I figure the prime buying time for this quarter will be tomorrow while I am on a plane to Colorado. The price will spike when my plain lands and you can all tell me about what a great buying experience you had. :-(

OMG now I know why I get my father's advice when buying stock trying to understand this is like learning Greek.

I do thank those who have tried to break it down for us non accounting savvy types. My dad (been at stocks much longer then me) tried explaining what this article ment and how it would impact existing stock holders, needless to say the blank, deer in the head lights look i gave him conveyed that I had no idea what he was talking about. I think I have a grasp on it now though after reading this thread.

Any idea on what a significant supercharger announcement next week will do to the share price?

It won't hurt.

But it's usually not wise to buy more stock right after a spectacular rise.


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