Tesla is capitalizing on its stock's hot streak
Ben Kallo, an equity analyst with Baird who rates Tesla “Neutral,” said in a research note that the offering is “prudent given current share prices.”
“We believe TSLA’s decision to raise capital was smart; in fact we think investors will argue the offering should have been larger,” Kallo said. “That said, we do note management indicated on the Q4 call that it ‘doesn’t make sense’ to raise money given upcoming cash generation, so the announcement was somewhat surprising.”
Garrett Nelson, a CFRA equity analyst with a Sell rating on Tesla, said the offering was to be expected owing to “ambitious growth plans” and struck a more cautious tone on the company’s near-term outlook. “Recent speed bumps including a coronavirus-related delay in vehicle deliveries from its new China factory and Model X recall likely factored into management's decision to proceed with the offering,” he said. The company’s capex plan for 2020 of between $2.5 billion and $3.
Goldman Sachs and Morgan Stanley are lead managers for the offering, with Barclays, BofA Securities, Citigroup, Credit Suisse, Deutsche Bank and Wells Fargo Securities and Societe Generale also participating.
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