Tesla Announces Offering Of Common Stock, Convertible Notes

Tyler Durden's picture

Several moments ago, TSLA (hardly) surprised the world when it filed an open-ended S-3 (Shelf) statement, as many had expected it was only a matter of time before the company used the recent surge in its stock price to sell shares. Then, a few moments later, TSLA once again (hardly) surprised the world when it announced a joint $450 million convertible bond and 2.7 million share common stock offering. And because a dilution is not a dilution if the founder is participating in the common offering (buying his own equity at an unprecedented price to "anchor" it as a benchmark- sure why not - after all he is making much on all the other equity he has in the firm that he is not buying, as a result), the stock is trading up after hours.

Full release below:

Tesla Motors, Inc. (NASDAQ: TSLA) announced today offerings of 2,703,027 shares of common stock and $450 million aggregate principal amount of convertible senior notes due 2018 in concurrent underwritten registered public offerings. In addition, Tesla has granted the underwriters a 30-day option to purchase up to an additional 405,454 shares of common stock and $67.5 million in aggregate principal amount of the notes.


In addition, Elon Musk, Tesla’s Chief Executive Officer and cofounder, intends to purchase shares of common stock at the same public offering price for an aggregate purchase price of $100 million. Of this amount, approximately $45 million would be purchased in the common stock offering, and approximately $55 million would be purchased directly from Tesla in a subsequent private placement due to the waiting period requirements of the Hart-Scott-Rodino Act.


The aggregate gross proceeds of the offerings, including the options granted to the underwriters, and the private placement is expected to be approximately $830 million. Tesla intends to use the net proceeds from the offerings to prepay Tesla’s outstanding loan from the United States Department of Energy, pay the cost of convertible note hedge transactions and for general corporate purposes.


The notes will be convertible into cash and, if applicable, shares of Tesla’s common stock. The interest rate, conversion price and other terms of the notes are to be determined.


In connection with the offering of the notes, 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. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes.


Goldman, Sachs & Co. is acting as sole book-running manager for the offering of common stock. Goldman, Sachs & Co., Morgan Stanley and J.P. Morgan are acting as joint book-running managers for the notes offering.

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Cursive's picture

Dilution, bitchez!

Divided States of America's picture

And stock goes up in Afterhours. More shares = higher share price

while for Gold: Less Gold Production = lower gold price

Fuck this world.

WTF_247's picture

Its up because the CEO is buying 100Mil of stock using his own money at the offering.  That is pretty big balls vs the shorts, considering.  Most CEO's would be selling stock in the offering, not buying more.

Joe Sixpack's picture

Shockingly, the Tesla turns out to be a car with a lot of potential. It is a current favorite. Don't resist the temptation to buy one. It has greater capacity than most other electric cars. People are getting amped up about the Tesla. Don't you get a charge? I could be induced to buy one.

McMolotov's picture

I see watt you did there.

CrazyCooter's picture

One observation:

Tesla is the only electric car company that is NOT already in the car business. All the other significant players simply cannablize their ICE car sales with electric car sales. Pause and think about the massive amounts of capital deployed for ICE based cars?

How many moving parts you got on an electric car compared to an ICE?

For this reason alone, I have always felt the big autos never wanted electric cars to catch on.

Maybe Tesla makes it, maybe they go tits up, but they are the only company that really wants their product line to succeed. If they go down, watch the other big autos pull their product lines.



zipit's picture

That's not an observation, it's crazy talk.  PS: Are you back from that Alaska detour/crisis-thing yet?

vened's picture

Tesla is a scam.  Here is why:

Energy Density (per kilogram)
Gasoline - 47.2 MEGAjoules
Lithium-ion battery - 720 kilojoules


Gasoline packs about 66 times more energy per unit of volume. Gasoline engines are much cheaper to produce. Every 4-5 years super expensive and environment poluting batteries have to be replaced in electric/hybrid vehicles.

Electric cars built with existing technology are scam - even Toyota admits it.

The best electric transportation are light rail and subway since energy density is irrelevant.

Joe Sixpack's picture

That reply had some power. You know how to conduct yourself.

Short Change's picture

Tesla has already been through the wringer financially.  At this point they are [nearly] a household name and Musk is positioning himself to extract the capital he injected to keep the company afloat.  I think it is safe to say that Musk will do (has done) whatever it takes to keep Tesla going and the market is starting to reflect that tenacity (and the fact that they have finally worked out a number of production issues that previously restricted growth). 

More_sellers_than_buyers's picture

That is not big balls fool , it is the ultimate ponzi! If madoff had a third son.....

overbet's picture

I fucking love when the news algos get fucked like this spot!!!

Taterboy's picture

Tesla has a new car color:"Tulip Mania"

ACP's picture

Lots of moving parts here. Musk buys his own shares, which seems bullish, but the underwriters have the option to buy more within 30 days. Would they buy at this price, or drive down (pun intended) the price within 30 days, in order to purchase cheaper? Or do they buy them all now and use Fed money to ramp the stock up anther 100%?

digitlman's picture

Still can't sell directly in NC.


BLOTTO's picture

God bless Nikola Tesla.


If he was alive today - he (probably) could careless about stocks and $...but only that he could help and improve in a positive manner, the good people of the world...



Joe Davola's picture

The good people who are the result of selective breeding.

edifice's picture

Tesla died penniless; got screwed by Edison, who was a shrewd businessman.

ersatzteil's picture

But Tesla got his designs featured in Frankenstein movies, making him the real winner.

PontifexMaximus's picture

The usual suspects are cashing in, châpeau!

Dr. Engali's picture

Looks like Goldman found some muppets who want to piss away their fiat.

Larry Dallas's picture

Goldman's muppets don't care because there is no alignment of interest among pension fund managers for performance.

Not so much muppets, but "Apathetic Muppets".

loveyajimbo's picture

If you missed out on the Solyndra opportunity of the decade... this is another chance for you!!

IridiumRebel's picture

So you think that it's over, say Elon has finally reached the end
Any time you call, night or day, I'll be right there for you
If you need a lend

It's gonna take a little time, I know, time is sure to mend that broken car
But don't you even worry, pretty darling, 'cos I know you'll find ROI, I know!

Elon's all around you, Elon is knockin' outside your door
Waitin' for you is this car made just for two
Keep an open heart and you'll find ROI, I know

Elon's all around you, yeah yeah, Elon is knockin' outside your door
Waitin' for you is this car made just for two
Keep an open heart and you'll find ROI, I know


It's range bound
It's range bound

Elon will find a way - darlin', Elon is gonna find a way
Find his way back to you
Elon will find a way - so look around, open your eyes
Elon is gonna find a way
Elon is gonna, Elon is gonna find a way, yeah
Elon will find a way - Elon is gonna find a way back to you, yeah yeah yeah


Elon will find a way - darlin', Elon is gonna find a way
Find his way back to you
Elon will find a way - oh just look around, look around
Open up your eyes now, honey
Elon is gonna find a way - Elon is gonna, Elon is gonna
Elon is gonna, Elon is gonna find a way, yeah
Elon will find a way - Elon is gonna find a way back to you, yeah, I know

Bernankenstein's picture

or how about this song (Courtesy of 3 Dog Night)


Elon's comin'

Elon's comin' (Elon's a-comin')

Well you better cover your short, your friggin' short

Elon's a-comin' and the cards say... a broken account


Elon's comin', cover your short, girl

Elon's comin', cover your short, girl

Girl, Elon's a-comin', you better cover

Girl, Elon's a-comin', you better cover

Girl, Elon's a-comin', you better cover

Girl, Elon's comin', cover your short, girl (cover it)

You better, better cover your short

Elon's comin', better walk

Walk but you'll never get away

No, you'll never get away from the burnin' a-margin call...



...and so on

SmittyinLA's picture

LOL we're in a green energy "pump" bubble, this company will disappear the second political protection is removed, maybe even before.

Most Tesla buyers aren't even paying for their free electricity (they charge at work) or the road taxes on top of a heavily subsidized purchase.

Thisson's picture

Convertible Notes?  I didn't know that Tesla made convertibles...

palmereldritch's picture

Why those notes are yet another form of green energy

WTF_247's picture

Shorts are totally screwed I think.

This offering makes me think 100% that the good ol boys at GS had a hand in the massive short squeeze, were already talking to TSLA and also knew that he intended to buy 100M worth. This gave the the confidence to risk firm capital to jam the stock through the roof.  Of course none of this will ever be disclosed and it was just random that the stock doubled in the last 5 days on its own with no news leak or help.

Jim B's picture

WTF! Their budget model starts at $71,000.  If I had no assets, I might get a student loan to buy one! 

css1971's picture

0 - 60 in 4.2 seconds. Quick.

260 mile range, which is what I got from my old petrol car.

css1971's picture

Are they the ones with an actual real vehicle available for purchase and use today which doesn't burst into flames when you use it?

Might be worth investing

Binko's picture

Tesla is selling to a very limited pool of buyers. Basically rich guys who like high tech and are willing to pay for novelty. My guess is that the majority of Teslas sit in a garage except for short ego rides. The pain of trying to find charging stations is not something most wealthy people will endure. Once they have sold into their limited market they are going to be hurting. There's simply no way to extend this type of car out to a broader market. 

rosiescenario's picture

On my commute in SV I am seeing many Tesla sedans. Their first car with the Lotus body required at least 3 years of yoga to enter or exit the vehicle....it was not a big seller, but looked cool.


Tesla also has some sort of car lease deal going which makes it fairly affordable.


Good thing they are able to do a financing as their balance sheet looked like crap...I was looking at it as a short, but then remembered that anything which looks like it should be shorted should actually be bought and bought using leveraged options.

unununium's picture

Which automotive company do you want to own

Insiders buying / Company selling - TSLA


Insiders selling / Company buying - AZO

Downtoolong's picture

buying his own equity at an unprecedented price to "anchor" it as a benchmark- sure why not

So, you really can trade with yourself to move the price of a stock. Shit, don't anybody tell the HFT computers.


pragmatic hobo's picture

either GM is really cheap or TSLA is really expensive ... and I didn't think GM was cheap.

Jay's picture

Let Musk screw his investors with stock dilution and his customers on the battery bonds deal. If he can pay off the DOE loan I'll remove half my curse.

jonjon831983's picture

quel surprise.


SELL into strength while you can.

WallowaMountainMan's picture

i didn't know tesla was a bank.

fredquimby's picture

The Tesla S just won the best car ever reviewed by some auto-hacks.

The Tesla Roadster is quicker than practically every car on the road.

The Tesla X SUV looks amazing and will also surely do well.


The main issue for me, is that outside of America, nobody has their own garage. (read: place to plug it in). These should be selling like crazy in America i.e Buy a Tesla and flick the bird at the ME Oil producers etc etc. but it just seems to be a niche still.

I had my name down for a Fisker but cancelled after a four year wait as I really cannot plug the fuscker in anywhere. This is a problem for anyone I know that is under 50 who is not as loaded as their parents. Also, anyone over 50 that can afford a Tesla roadster can't bend enough to get in it!

What electric transportation needs IMO is an electric RV. All RV sites have electric where you can plug in over night, RV's are big enough to haul 1000 mile battery packs. You are not in a rush when using an RV... etc etc....


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jmcadg's picture

I recommend reading The Great Crash 1929 by John Kenneth Galbraith

You'll see where these fucks at Goldman originate. Scammers right from the start.
You'll also see we are right back at the same place here in 2013.

The muppets will be financially raped right up to the point they can't be.
We're close.