Thank you very much;
you're only a step away from
downloading your reports.
Will Tesla Celebrate the Giga-Age With Texas Toast?
From the Buzz & Banter: The car maker sets the stage for future growth.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MV PRO+.

Yesterday after the close, Tesla Motors (NASDAQ:TSLA) announced it was raising $1.6 billion through a convertible note sale with underwriter options that could bring the sale's total to $1.84 billion.

$800 million will be due in 2019, with $800 due in 2021.

Tesla will use the proceeds to accelerate the growth of its existing business, develop a "Gen III" mass-market electric car, and most importantly, develop the highly anticipated Gigafactory.

According to Tesla, the Gigafactory is designed to drive down battery costs, and by 2020 it will put out more lithium-ion batteries than were made worldwide in 2013. That means enough batteries for 500,000 vehicles in 2020. Tesla will directly invest about $2 billion, with partners (Panasonic has been rumored as one) pitching in an additional $2 to $3 billion.

Tesla is likely to flex some political muscle as the result of the Gigafactory plan because it's going to bring 6,500 jobs to one of four states identified as finalists for the facility: Arizona, Nevada, New Mexico, and Texas.

As many people are pointing out, Texas is quite an interesting possibility, as there are significant restrictions on manufacturer-direct car sales there, courtesy of the state's strong auto dealer lobby. Tesla has galleries (which are distinct from Tesla stores) in Houston and Austin where employees are not allowed to discuss pricing options or the reservation process and can't refer customers to stores in other states.

The lure of quality manufacturing jobs from such a prestigious company may help Tesla win over some Texas politicians. And Tesla has a very good reason to want to get into Texas: Only California has more licensed drivers.

Overall, this is great news for the company. Battery supply remains its biggest manufacturing bottleneck, and the Gigafactory will help ensure steady production growth.

That means investors will have more confidence in their long-term earnings expectations for Tesla.

Now there are a lot of Tesla bears out there whining and crying about the stock's crazy upward momentum, floating around innuendos about improper accounting, the stock's valuation, and improprieties on the research side.

As someone who's been regularly tempted to hop on board for a while, I'll just say this: By any conventional measure, Tesla was expensive at $200. And it was expensive at $100.

So obviously it's expensive over $250.

Think twice before stepping in front of this runaway freight train.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Will Tesla Celebrate the Giga-Age With Texas Toast?
From the Buzz & Banter: The car maker sets the stage for future growth.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MV PRO+.

Yesterday after the close, Tesla Motors (NASDAQ:TSLA) announced it was raising $1.6 billion through a convertible note sale with underwriter options that could bring the sale's total to $1.84 billion.

$800 million will be due in 2019, with $800 due in 2021.

Tesla will use the proceeds to accelerate the growth of its existing business, develop a "Gen III" mass-market electric car, and most importantly, develop the highly anticipated Gigafactory.

According to Tesla, the Gigafactory is designed to drive down battery costs, and by 2020 it will put out more lithium-ion batteries than were made worldwide in 2013. That means enough batteries for 500,000 vehicles in 2020. Tesla will directly invest about $2 billion, with partners (Panasonic has been rumored as one) pitching in an additional $2 to $3 billion.

Tesla is likely to flex some political muscle as the result of the Gigafactory plan because it's going to bring 6,500 jobs to one of four states identified as finalists for the facility: Arizona, Nevada, New Mexico, and Texas.

As many people are pointing out, Texas is quite an interesting possibility, as there are significant restrictions on manufacturer-direct car sales there, courtesy of the state's strong auto dealer lobby. Tesla has galleries (which are distinct from Tesla stores) in Houston and Austin where employees are not allowed to discuss pricing options or the reservation process and can't refer customers to stores in other states.

The lure of quality manufacturing jobs from such a prestigious company may help Tesla win over some Texas politicians. And Tesla has a very good reason to want to get into Texas: Only California has more licensed drivers.

Overall, this is great news for the company. Battery supply remains its biggest manufacturing bottleneck, and the Gigafactory will help ensure steady production growth.

That means investors will have more confidence in their long-term earnings expectations for Tesla.

Now there are a lot of Tesla bears out there whining and crying about the stock's crazy upward momentum, floating around innuendos about improper accounting, the stock's valuation, and improprieties on the research side.

As someone who's been regularly tempted to hop on board for a while, I'll just say this: By any conventional measure, Tesla was expensive at $200. And it was expensive at $100.

So obviously it's expensive over $250.

Think twice before stepping in front of this runaway freight train.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
More From Michael Comeau
Daily Recap
Will Tesla Celebrate the Giga-Age With Texas Toast?
From the Buzz & Banter: The car maker sets the stage for future growth.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MV PRO+.

Yesterday after the close, Tesla Motors (NASDAQ:TSLA) announced it was raising $1.6 billion through a convertible note sale with underwriter options that could bring the sale's total to $1.84 billion.

$800 million will be due in 2019, with $800 due in 2021.

Tesla will use the proceeds to accelerate the growth of its existing business, develop a "Gen III" mass-market electric car, and most importantly, develop the highly anticipated Gigafactory.

According to Tesla, the Gigafactory is designed to drive down battery costs, and by 2020 it will put out more lithium-ion batteries than were made worldwide in 2013. That means enough batteries for 500,000 vehicles in 2020. Tesla will directly invest about $2 billion, with partners (Panasonic has been rumored as one) pitching in an additional $2 to $3 billion.

Tesla is likely to flex some political muscle as the result of the Gigafactory plan because it's going to bring 6,500 jobs to one of four states identified as finalists for the facility: Arizona, Nevada, New Mexico, and Texas.

As many people are pointing out, Texas is quite an interesting possibility, as there are significant restrictions on manufacturer-direct car sales there, courtesy of the state's strong auto dealer lobby. Tesla has galleries (which are distinct from Tesla stores) in Houston and Austin where employees are not allowed to discuss pricing options or the reservation process and can't refer customers to stores in other states.

The lure of quality manufacturing jobs from such a prestigious company may help Tesla win over some Texas politicians. And Tesla has a very good reason to want to get into Texas: Only California has more licensed drivers.

Overall, this is great news for the company. Battery supply remains its biggest manufacturing bottleneck, and the Gigafactory will help ensure steady production growth.

That means investors will have more confidence in their long-term earnings expectations for Tesla.

Now there are a lot of Tesla bears out there whining and crying about the stock's crazy upward momentum, floating around innuendos about improper accounting, the stock's valuation, and improprieties on the research side.

As someone who's been regularly tempted to hop on board for a while, I'll just say this: By any conventional measure, Tesla was expensive at $200. And it was expensive at $100.

So obviously it's expensive over $250.

Think twice before stepping in front of this runaway freight train.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
EDITOR'S PICKS
 
WHAT'S POPULAR