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Shares for Tesla (TSLA) surge on Wall Street
The initial public offering raised $226.1 million, more than expected, with $202 million going to Tesla itself.
Wed, Jun 30 2010 at 10:19 AM
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TESLA TAKES OFF: Elon Musk, CEO of Tesla Motors, poses with a Tesla car in Times Square following the electric automaker’s initial public offering. (Photo: Mark Lennihan/AP)
Tesla Motors got off to a flying start on Wall Street Tuesday as shares in the U.S. electric carmaker soared more than 40 percent over its initial public offering price.
Shares in Tesla, the first U.S. auto manufacturer to go public since Ford in 1956, gained $6.89, or 40.5 percent, to close at $23.89.
The Palo Alto, Calif.-based carmaker, which is being traded on the Nasdaq under the symbol "TSLA," offered 13.3 million shares in the fledgling company priced at $17 per share.
The initial public offering raised $226.1 million, more than expected, with $202 million going to Tesla itself.
"It gives them some cash that they desperately need," said John O'Dell, senior editor at Edmunds GreenCarAdvisor.com, adding that Tesla's IPO was a "bit of referendum on the future of the electric car."
"(But) it's more a vote of confidence in Tesla and in (founder Elon Musk) personally than an overall vote of confidence in the ability of startups in general to compete in the automaking arena," he said.
Founded in 2003 by Musk, a co-founder of online payments giant PayPal and SpaceX, whose Falcon 9 rocket blasted off on its maiden voyage this month, Tesla specializes in environmentally friendly electric cars.
The Tesla Roadster, a high-performance sports car, costs more than $100,000 and can go nearly 250 miles (400 kilometers) on a single charge.
Tesla is also making a "Model S" five-passenger sedan powered by lithium-ion battery packs capable of between 160 and 300 miles (257 and 482 kilometers) per charge.
In a filing with the Securities and Exchange Commission (SEC) for its initial public offering, Tesla said it had sold 1,063 Tesla Roadsters to customers in 22 countries as of March 31.
The Model S, expected in 2012, has an anticipated base price of around $50,000.
According to the documents filed with the SEC, Tesla has generated total revenue of $147.6 million since it was founded and has accumulated a deficit of $290.2 million.
The company said it had a net loss of $55.7 million last year.
Musk, in an interview with CNBC television on Tuesday, said "people need to appreciate that if we were just making the Roadster, we would be profitable as a company but we are in massive expansion mode.
"We are increasing our volume by 30 to 40 fold, so it is just impossible for a company to be profitable given that level of growth," Musk said.
Analyst Douglas McIntyre of 247WallSt.com was downbeat on Tesla's prospects saying it could go the way of the DeLorean.
"Most large global car companies are within a year or two of launching their own electric models," he said. "Almost all major vehicle manufacturers have 'green' hybrid cars that are aimed at the same segment of environmentally conscious drivers.
"The Telsa is too 'niche' a vehicle to be successful," McIntyre said. "Even with its IPO proceeds it can only build a few thousand cars."
Japan's Toyota has already agreed to take a $50-million stake in Tesla, purchasing 3.33 million shares in the company.
German luxury carmaker Daimler took a 10 percent stake in Tesla in May of last year and sold 40 percent of its stake in July to Aabar Investments group of the United Arab Emirates.
Last year, Tesla received a $465-million-dollar loan from the Department of Energy's Advanced Technology Vehicles Manufacturing Incentive Program to help it build the Model S.
Copyright 2010 AFP American Edition
Also on MNN: IPO brings in $266 million for Tesla
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