Tesla IPO Priced At $17/Share, Market Cap Estimated At $1.6b

Edward Niedermeyer
by Edward Niedermeyer

A source tells Reuters [UPDATE: Tesla confirms in press release] that Tesla has

sold 13.3 million shares for $17 each, raising about $226 million. It raised the number of shares it hoped to sell by 20 percent. It had planned to sell 11.1 million shares for $14 to $16 each.

That’s more than the “as much as $213m” number floated earlier, but with a recent Toyota deal and an EV-infrastructure bill in congress, Tesla has as much wind at its back as it can ask for. But if investors do get to start trading Tesla stock starting tomorrow, they’ll have a gut check before long. Tesla lost $30m last quarter, and it the second quarter ends on Wednesday. If those numbers show another healthy loss, investors will look away knowing that they’re in a risky, long-term investment. But can a $1.6b market-cap firm really compete in development, design and manufacturing with the giants of the automotive world simply by taking in two times its 2009 revenue in one IPO?

On that point, Bloomberg BusinessWeek has an interesting insight:

At the midpoint price of $15, Tesla is valued at 5.5 times its net tangible assets, a measure of shareholder equity that excludes assets that can’t be sold in liquidation. That’s triple the median 1.82 times for automotive companies globally, data compiled by Bloomberg show.

Which means Tesla is even more overleveraged at $17/share. And Tesla’s own prospectus mentions the challenges the firm faces at its projected volumes, especially on the retail front. Unless Tesla figures out how to get state-by-state franchise laws to allow internet car sales, much more money will need to be raised. Meanwhile, the Model S has yet to be spotted publicly road testing. And the Roadster is being canceled.

At the same time, Tesla’s sheer audacity deserves at least a little respect. It’s a wild moonshot of a company that resonates with lots of Americans for a number of reasons. The West coast of the United States doesn’t have many home-grown automotive protagonists. Tesla has probably benefited to some extent from anti-petroleum sentiment stirred up by the Gulf of Mexico oil spill. Still, Tesla needs to run on more than feel-good momentum and boutique service. They need to sell cars.

Edward Niedermeyer
Edward Niedermeyer

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  • Greg Locock Greg Locock on Jun 29, 2010

    "overleveraged "? In what version of the English language? Capital raised via shares typically reduces leverage.

  • George70steven George70steven on Nov 23, 2010

    Tesla is a scam and a racket that deserves condemnation, beyond maybe riding whatever enthusiasm is out there and dumping before it all comes crashing down. car insurance quote

  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
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