Tesla Inc (NASDAQ:TSLA) is enlisting the investing public's help to fund production of its latest line of electric vehicles. The new $1.5 billion offering, which will be senior unsecured debt, will bring total debt to approximately $9.6 billion. The Model 3 silhouette resembles that of the Model S, but the new electric ride is smaller with a simpler design.
The company's stock has added about 67% for the year to date, after peaking at a year-to-date gain of almost 80% in mid-June. It would be the company's first sale of non-convertible bonds, according to data compiled by Bloomberg.
Like Netflix bond investors, those buying Tesla's debt are receiving relatively low rates amid high risk, and without access to potential share price appreciation. That's still a good place to be from a cash perspective, and it nearly guarantees that Tesla will sell all of the vehicles it can produce not only this year, but also for all of 2018.
Tesla's stock is up about 68% so far this year. Anyone ordering a Model 3 today is likely to qualify for a $3,750 credit at best, and potentially less (depending on whether Tesla can meet its production goals). The carmaker plans to make 500,000 vehicles in 2018 and a million in 2020.
The rating agency said the overall company's "B2" rating was supported by the fact that if Tesla ends up in serious financial trouble, its brand name, products and physical assets would be of "considerable value" to other automakers.
Last week, Tesla said that it was planning to spend about $2 billion in capital expenditures during the second half of the year as they ramp the production of Model 3.
Musk said on a quarterly earnings conference call last week that the company was considering raising debt, but not equity.
The long-range Model 3, meanwhile, comes with a hefty price premium over the regular Model 3.
"You won't really need to look at an instrument panel all that often", Musk said during the Model 3 handover event, adding that people will eventually be able to "watch a movie, talk to friends, go to sleep" in Tesla'scars. "Obviously, that's like the promised land right there". For this year's second quarter, which ended in June, Tesla had reported 22,046 Model S and X deliveries. Insiders sold a total of 115,980 shares of company stock worth $36,010,269 over the last three months. The rate at which TSLA is burning through cash is estimated to surpass $2 billion this year and has prompted short-sellers like Greenlight Capital's David Einhorn to bet on the fall of TSLA stock.
Sam , 16, continues his recovery at Dandenong Hospital after doctors struggled for most of Sunday to control the bleeding. According to the teen's father, Jarrod Kanizay , the bleeding wasn't noticed until about 30 minutes into the soak.
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