Tesla Motors shares increased after it announced a decision to offer stock and notes in an $830 million deal that will enable it to repay its debt to the US government earlier than planned. Things are looking better than ever for the electric automaker.
This follows other positive events for Tesla, including the company’s first quarterly profit. Still, Tesla owes the government $465 million for the loan provided by the US Department of Energy (DOE) to develop zero emissions vehicles (ZEV). Tesla Motors said it would sell 2.7 million shares of its common stock, and $450 million of convertible senior notes.
Elon Musk will help the debt repayment process by purchasing $100 million dollars of shares in Tesla Motors himself, and at the same price as the current public offering. $45 million of those shares will be via public offering, and the other $55 million directly from Tesla Motors.
He owns 27 million shares in Tesla Motors, which accounts for 24% of Tesla Motor’s stock. Tesla Motors’ stock value increased from $33.87 at the end of 2012 to $93.56 on Thursday, almost tripling overnight.
According to Bloomberg Businessweek: “Tesla’s rapid stock price rise has some skeptics. Deutsche Bank raised its target price — but only to $50, from $35, and kept a “Hold” rating on the stock. A note from the firm said the target price implies a 14 percent pre-tax margin on 40,000 cars sold. That’s a little higher than the premium assigned to Porsche during its rapid growth in the early 2000s, the note said.”
But others are feeling the Tesla love. According to a Morgan Stanley analyst, Adam Jones: “What Tesla has accomplished isn’t luck, it’s real”.