Tesla shares (TSLA) slide amid $2 billion stock offering announcement

Joey Klender

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Posted on February 13, 2020

Tesla shares (NASDAQ: TSLA) slid on Thursday following an announcement that the company will be offering around $2 billion worth of common stock. The fundraising round comes amid TSLA stock’s recent skyrocket in value.

The offering could bring in an additional $2.3 billion, according to a press release. Just before Tesla made the announcement, the company predicted around $3.5 billion in capital expenditures so far in 2020. This is due to CEO Elon Musk’s sooner-than-anticipated delivery of the Model Y crossover, along with the company’s increased rate of production at Gigafactory Shanghai, as well as the construction of a new European Gigafactory in Berlin.

The company’s shares took a hit of 7.2% after announcing the additional offering of common stock, though this has leveled down to about 3.2% as of writing. This is despite a more than 300% growth in price per share since TSLA’s meteoric rise started in October 2019.

Tesla’s 10-K filing showed a high-end increase of up to 164% from 2019 as the company used frugal spending to maintain strong cash flow. The company spent just over 50% of its estimated $2.5 billion in expenditures by only using $1.33 billion of its initial plan.

Below is Tesla’s press release on its new stock offering.

PALO ALTO, Calif., Feb. 13, 2020 (GLOBE NEWSWIRE) — Tesla, Inc. (“Tesla”) today announced that it intends to offer approximately $2 billion of common stock in an underwritten registered public offering. Tesla has also granted the underwriters a 30-day option to purchase up to approximately $300 million of additional common stock.

Elon Musk, Tesla’s CEO, will participate by purchasing up to $10 million of common stock in this offering. In addition, Larry Ellison, a member of Tesla’s Board of Directors, will purchase up to $1 million of common stock.

The aggregate gross proceeds of the offering, assuming full exercise by the underwriters of their option to purchase additional securities, would be approximately $2.3 billion before discounts and expenses. Tesla intends to use the net proceeds from the offering to further strengthen its balance sheet, as well as for general corporate purposes.

Goldman Sachs & Co. LLC and Morgan Stanley are acting as lead joint book-running managers for the offering, with Barclays, BofA Securities, Citigroup, Credit Suisse, Deutsche Bank Securities, and Wells Fargo Securities acting as additional book-running managers, and Societe Generale acting as co-manager.

An effective registration statement relating to the securities was filed with the Securities and Exchange Commission on May 2, 2019. The offering of these securities will be made only by means of a prospectus supplement and the accompanying prospectus. Copies of the preliminary prospectus supplement and the accompanying prospectus may be obtained from (i) Goldman Sachs & Co. LLC, Attn: Prospectus Department, 200 West Street, New York, NY 10282, telephone: 866-471-2526, facsimile: 212-902-9316 or email: prospectus-ny@ny.email.gs.com or (ii) Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, New York 10014.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. The securities being offered have not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the registration statement, the prospectus contained therein or the prospectus supplement.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

Tesla shares (TSLA) slide amid $2 billion stock offering announcement

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Tesla becomes one of China’s top local electric car producers in January

Joey Klender

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Posted on February 12, 2020

January was a big month for Tesla’s Giga Shanghai, with Made-in-China Model 3 production hitting its stride following trial manufacturing runs at the end of 2019. Reports indicate that Giga Shanghai was able to build over 2,600 units of the Made-in-China Model 3 in January, despite the company stopping operations for the Chinese New Year, and later, the coronavirus outbreak. This resulted in Tesla manufacturing the 5th-largest number of battery electric vehicles in China in January 2020.

With a rate of 2,625 Made-in-China (MIC) Model 3s produced before the Lunar New Year holiday on January 25th, it appears that Tesla was indeed producing about 1,000 units of the all-electric sedan per week when the year started. This is quite impressive, as Giga Shanghai’s new production lines that are not fully optimized yet. With its lines not running at max capacity, one can only imagine how many more vehicles the facility could produce.

Tesla has stated that the run-rate of Model 3 production at Giga Shanghai has reached about 3,000 vehicles a week. Before the end of 2019, the electric car maker stated that it had been producing 280 vehicles per 10-hour shift, but it planned to raise this number significantly to reach its 3,000-per-week-target. This would require just below 430 vehicles per shift.

On February 5, Tesla decided to temporarily shut down operations in Shanghai following the outbreak of the coronavirus. The announcement came from Tesla China’s Vice President for External Affairs Tao Lin, who suggested the safest option was to temporarily halt deliveries to preserve the safety and health of the company’s employees and customers. Tesla also offered a lending hand to Chinese citizens by giving free Supercharging to owners living in affected areas.

The company resumed production and deliveries on February 10. While recognizing that the short-term delay in production would set back rates, it was the smartest option. But while the production facility is still not running at full-capacity as China is still dealing with the virus, Giga Shanghai is operational once more.

Tesla’s battery supplier LG Chem, along with Daimler and Ford, announced they would be resuming operations of February 10 as well. BMW will wait another week and will resume production on February 17.

Affected by a large-scale virus and expected off-days due to holiday celebrations, Gigafactory Shanghai was still able to show notable production numbers in January. Surely, Tesla has plans to ramp up this production to 150,000 vehicles a year and beyond, an attainable goal in the foreseeable future as all employees return and all production lines become fully optimized.

Tesla becomes one of China’s top local electric car producers in January

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Tesla Model 3 conquers icy trails with crazy snow track modification

Joey Klender

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Posted on February 11, 2020

A Tesla owner has installed snow tracks on his Model 3, making the all-electric sedan increasingly functional in heavy snow.

YouTuber Michael of the lowlifeduramax YouTube channel installed the snow tracks on his Model 3 Standard Range+. The Tesla owner previously tested out his Model 3 in a tug-of-war match against his Chevrolet Duramax pickup truck.

This time, Michael threw a pair of snow tracks on his Model 3 to increase its effectiveness in snowy weather. While the Model 3’s curb weight sits at 3,552 pounds and is a heavy vehicle to begin with, the Tesla owner was interested in turning his electric car into “an electric snowmobile.”

(Credit: lowlifeduramax/Instagram)

Credit: YouTube/lowlifeduramax

Credit: YouTube/lowlifeduramax

Credit: YouTube/lowlifeduramax

With the help of Mullin Manufacturing in Meritt, British Columbia, Michael was able to mount the snow tracks where the rear wheels would usually sit. Mullin was responsible for creating a mounting system that would link the tracks to the disc brakes. After creating this linkage, Michael simply attached the snow tracks and began driving.

The Model 3 performed successfully on a snowmobile trail in British Columbia, traversing through areas where there are large amounts of snow. The only real issues that arose from the test were on the part of the snow tracks themselves. When operating the vehicle in reverse and navigating through unpacked snow accumulation on the side of the road, for example, the track would begin to slip off and lose traction. The Tesla owner noted that with a bit more tension in the system, this issue would likely be resolved.

Overall, Michael was impressed with the performance of the vehicle. He noted on several occasions that the Model 3 was able to make it through the snow trail with no issues. “She rides nice, no complaints. Climbs this hill like nothing,” he said.

The Tesla owner added that that no damage was done to the vehicle cosmetically or mechanically due to its radical modification. Never one to shy away from crazy tests on his Model 3, Michael added that he plans to take his Model 3 mudding with the tracks installed soon.

Interestingly, the tracks used for the Model 3’s unique modification seem to be similar to those used for trucks and SUVs. Michael has not specified what brand the tracks he used are, nor how much they cost.

You can watch Michael of lowlifeduramax’s video of his Model 3 with snow tracks installed below.

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Tesla Model 3 conquers icy trails with crazy snow track modification

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