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Tesla says may seek new funding; shares up after SEC agreement
(Reuters) - Tesla Inc said on Monday it could seek alternative sources of financing, days after Chief Executive Officer Elon Musk reached a deal with U.S. securities regulators to settle a dispute over his Twitter use, removing an overhang on the stock.
Shares of the electric carmaker rose 1.8 percent to $239.42 in late trading.
Tesla said in a quarterly filing with the Securities and Exchange Commission that it expects cash generated from its business to be enough to fund its investments and pay down debt for at least the next 12 months, but that it may decide to raise debt to fund growth.
Wall Street has been looking for more details after Musk last week said, “It’s probably about the right time” to raise capital. He was speaking after the company posted a $700 million loss for the first quarter.
Many analysts had predicted the company would need to raise funds for its expansion, including the Shanghai factory, the upcoming Model Y SUV and other projects.
Musk’s agreement with the SEC on Friday puts the focus back on execution as Tesla tries to ramp up production of its most important vehicle, the Model 3 sedan, and make a profit at the same time.
So far, Tesla has raised funds through bank loans, several rounds of equity sales, issued convertible notes, a $1.8 billion junk bond sale, securitization of its vehicle leases and solar asset-backed notes.
The company’s preferred method for raising capital in public debt markets has been through convertible securities, with seven issued since 2013. These have allowed it to raise funds at a lower interest rate than plain-vanilla bonds because investors are willing to accept a lower coupon for the prospect of converting the debt to equity.
Of Tesla’s three convertibles to have reached maturity to date, however, only one has been converted into equity. The company’s stock failed to reach the conversion price for the other two, forcing it to repay the bondholders in cash.
The company paid off $920 million in debt earlier this year and a $566 million repayment is due in November.
“It’s all speculation but beyond the bond and equity markets Tesla could do a direct cash investment from an investor like a big private equity firm or a firm like SoftBank,” Morningstar analyst David Whiston said.
He said the company is more likely to just issue equity, adding that “the share count is so small relative to big automakers and the cash raise would ease any investor anxiety that the market probably would not severely punish the dilution, if at all”.
Tesla is rated six notches into noninvestment grade, or junk bond, territory by both Moody’s Investors Service and S&P Global Ratings. Both rating agencies have a negative outlook on the company’s debt.
“If it was just straight debt they’d have to pay a higher interest rate. But convertible investors are willing to pay for some potential future upside in the equity,” Geoffrey Dancey, managing partner and portfolio manager at Cutler Capital Management said after Musk’s comments on Wednesday.
“Tesla, of all companies, sells the story of their upside.”
The company expects capital expenditures of $2 billion to $2.5 billion this year and about $2.5 billion to $3 billion annually for the next two fiscal years, a spokesperson told Reuters.
Tesla’s $1.8 billion junk bond sank half a cent to yield 8.42 percent on Friday, more than 3 percentage points above the bond’s coupon rate of 5.3 percent.
Its spread, or the premium investors demand for the added risk of holding Tesla debt rather than a safer U.S. Treasury security, widened by about 15 basis points to a near-record 611 basis points.
https://www.reuters.com/article/us-tesla-capital/tesla-says-may-seek-new-funding-shares-up-after-sec-agreement-idUSKCN1S513W
He not getting shit at that spread-but anything possible.
TSLA
+6.40 (+2.72%)
Volume 16,077,639
Avg. Volume 9,278,391
Who in da fuq buying this?…rhetorical question
still gotta get paid on it but yea know what you mean. They had 'issues' paying out on short's 10+ year's ago. Had some shit busted because the 'wrong' people made money.
S&P Hits Record High, Most Overbought Since VIXmageddon
(look up VIX termination event)
The last time the S&P 500 was at a record high and this overbought was January 2018 - right before the world fell out of the bottom of VIX shorts.
(see cap 2 for circled record high and the main chart in NAS and the "roasting of the short's" continuing)
Notably, extending last week's decoupling, VIX was higher as stocks rose today… The last time we saw this was January 2018's melt-up as buyers bid up vol on the back of call options.
Ignore this. (cap #3)
After the worst week in six months last week, Chinese stocks were very mixed overnight with ChiNext dumping and the big cap SSE50 rallying.
The day started ugly for Spain after their elections but a magic bid arrived across Europe and lifted everything back to breakeven by the close.
After Friday's late-day melt-up, was there ever any doubt that the S&P 500 would break to record intraday highs.
Small Caps led on the day, Trannies lagged…with the Dow managed to just hold green
Treasury yields rose on the day with the long-end the biggest price laggard, steepening 3bps against the short-end (NOTE - Japan on golden week).
30Y remains well below 3.00% though.
The slide in the dollar continues (albeit modestly)…
Cryptos were mixed with Bitcoin and Ether higher, Bitcoin Cash and Litecoin lower.
Copper and Crude managed gains as gold (and worse silver) slipped lower (despite a flat dollar).
Finally, we ask a simple question - if everything is so awesome (which it 'clearly' is, just ask stocks), why are markets pricing in 29bps of rate cuts in the rest of 2019?
See cap 4
https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html/
https://www.zerohedge.com/news/2019-04-29/sp-hits-record-high-most-overbought-vixmageddon
https://finance.yahoo.com/quote/%5EIXIC?p=^IXIC
ty for that anon. Not watching and commentary alway's better in here for a long time. Appreciate it and keep it coming.
o7
this is true anon it has, however it's how it has done that. They system is cornered and they are printing and shoving everything they have at it is a bid for survival. Low volume's, totally against what the real earning's report's say. Go look up the new's on TSLA. They are fucked and somehow they spin it as positive. Be careful is all I'm saying.
https://www.secform4.com/insider-trading/80424.htm
he baking now.. bring it over