Published on June 29th, 2010 | by Nick Chambers
Tesla Raises $226 Million in IPO, Stock Gains 40% on First Day
The first day of trading for the first American auto manufacturer to go public since Ford did in 1956 ended with a bang. After selling 13.3 million shares at 17 bucks a pop for a $226 million haul, Tesla’s stock surged steadily over the day to close up more than 40% at $23.89 per share. This is made even more impressive by the fact that the rest of the market sunk drastically. In fact, Tesla was the largest gainer on the NASDAQ today.
Not bad for a company that has yet to turn a profit and doesn’t even have any hope to do so until 2012, when its Model S “family sedan” goes on sale for $50,000.
I’m by no means providing any kind of financial advice—hell, I don’t even own any stock of anything—but it seems like investors could care less about Tesla’s current financial situation and have been sold on its ability to raise capital as well as its plans for the future. If nothing else, today was a vote of confidence in the strength of the electric car as a big part of the solution to our problems.
Okay, I know, so just because Tesla had a good first day, it’s not a reliable predictor for the future of their stock. I mean just look at battery supplier A123—another clean energy economy sweetheart. Their IPO last September was a tremendous success too, climbing from an initial price of $13.50 to a high above $25 within the first week. But over the course of the year it has dropped quite a bit and now has sort of flatlined around $9 per share.
A123’s first real product isn’t coming until 2012 so investors have become bored with the stock and reticent to jump back in until some real teeth are put behind the hype. Tesla will face the same issues, because they will have no real product to sell until 2012 when the Model S starts being produced in California. The Roadster is, and always has been, a limited production vehicle that Tesla will cease making this year.
Only time will tell what Tesla’s real value is, but for now they are basking in the glow of a tremendous first day.