As expected, Tesla announced a capital raise to fund the building of the upcoming Tesla Model 3.
Tesla itself said it would offer about $1.4 billion worth of shares, with the remaining shares sold by CEO Musk to “cover tax obligations associated with his concurrent exercise of more than 5.5 million stock options.”
Of the CEO’s portion, Musk will sell 2.8 million and donate 1.2 million to charity a statement reads, but his share of the company overall will increase.
More than 11 million shares in total could be sold.
As for the Model 3 specifically, Tesla pegged the exact number of persons putting down a deposit on the car (after recently disqualifying some multiple orders and allowing for customer cancellations):
“On March 31, 2016, we unveiled Model 3, a lower priced sedan designed for the mass market, and as of May 15, 2016, we held deposits from about 373,000 customers who had made reservations for this car. This reservation total is a net number after customer cancellations of about 8,000 and after about 4,200 reservations that we canceled on the belief that they could have been duplicates from speculators.”
Tesla had earlier pegged the number around 400,000 and this SEC filing today reinforces that number, however the gross amount of reservations including those customers with 2 orders (the maximum allowed) is still not known.
Tesla added the following statement to Model 3 demand:
“We have obtained this level of reservations without any advertising or paid endorsements, with only a few social media posts leading up to the March 31 st unveiling, without anybody but those who were in attendance on March 31 st having had an opportunity to test drive the car, without yet publicly disclosing numerous features about the car, and with almost no attempt to drive customers to make Model 3 reservations since the week following the March 31 st unveiling.”
As for pushing the reservation total higher than ~400k, Tesla says they really aren’t interested:
“If we wanted to, we believe that we could further increase the number of Model 3 reservations with minimal effort, but believe it is better to guide customers to purchase products currently in production. We are on track to achieve volume production and deliveries of Model 3 in late 2017. Because of the significant demand that we have seen, we have decided to advance our 500,000 total vehicle build plan (combined for Model S, Model X, and Model 3) to 2018, two years earlier than previously planned.”
Morgan Stanley and Goldman Sachs are bookrunners on the capital raise, the latter of which also just put out a bullish call earlier today on Tesla, upgrading it to a “buy”, saying the shares could be worth up to $250, causing the stock to gain more than $6 (3%).
However, the response to the capital raise after hours (via Goldman) however was (not surprisingly) negative, with shares trading off as much as 3%, before trading sideways in pre-market action, then closing slightly up Thursday (real time quote here). Where will the day/week/year end? With TSLA (the stock) who ever really knows?
Maybe it is just us, but the whole stock upgrade/price target bump, just hours ahead of a capital raise underwritten by the same company just doesn’t sit too well with us…above board or not.