Forgot your password?
typodupeerror
Transportation Technology

Tesla IPO Raises $226 Million 274

Posted by kdawson
from the ok-fine-but-when-will-they-fly dept.
An anonymous reader writes "Tesla, which will trade under TSLA on Nasdaq, has been priced at $17 per share, allowing the electric car start-up to raise more than $226 million in its IPO. Investors were expecting the share price target range to be between $14 and $16 but the overflow of excitement saw Tesla increase the number of shares it plans to offer to 13.3 million, nearly 20 percent more than originally planned." Reader hlovy contributes a link from Xconomy.com summarizing the skepticism among some analysts as to how much staying power TSLA will demonstrate.
This discussion has been archived. No new comments can be posted.

Tesla IPO Raises $226 Million

Comments Filter:
  • Today Elon Musk, CEO of Tesla Motors, was seen shaking the robotic arm of a submersible BP robot [slashdot.org] at the IPO celebration ...
  • As of this posting, the stock price is already over $20.5. Clearly, some people think it's better than $17
    • by SLot (82781) on Tuesday June 29, 2010 @01:45PM (#32734628) Homepage Journal

      Clearly, many people don't remember pets.com

      • Re: (Score:3, Insightful)

        by qortra (591818)

        Are you seriously comparing the quintessential .com bubble site to a profitable [cnet.com] and innovative car company? Just because their stock price is increasing on opening day doesn't mean that they're about to burst.

        For instance, take - Google's stock [google.com]. There were a multitude of pundits and "experts" claiming that their $100 IPO price levels were totally unsustainable. They looked pretty stupid when the price doubled in 6 months. Sure, Tesla is no Google, but don't imagine that their stock price is guaranteed plum

        • by savanik (1090193) on Tuesday June 29, 2010 @02:12PM (#32735010)

          No revenue stream now; no revenue stream until 2012.

          This seems to be pretty much parallel to most of the business plans of dot-coms. "We have cool new technology! What, we also need sales?"

          It really depends on how well they can market the roadsters... which they have not shown to be one of their strong suits yet. Time will tell. Opening day will not.

          • by Tekfactory (937086) on Tuesday June 29, 2010 @02:21PM (#32735140) Homepage

            Nope, they stopped making the Roadsters, all work now is on the S-Sedan and licensing their Drivetrain technology to Mercedes and Toyota.

            • by cayenne8 (626475)
              "Nope, they stopped making the Roadsters, all work now is on the S-Sedan and licensing their Drivetrain technology to Mercedes and Toyota."

              Oh..that blows.

              Why would anyone want just another run of the mill "family car".

              If it's got > 2 functional seats, I ain't interested. If they could have just gotten the Tesla roadster down to around Corvette prices....I think a LOT more of us would have them.

            • by qortra (591818)
              I read some articles that claimed they won't stop producing Roadsters until 2011 - are those articles out of date?
            • For the immediate future, the S sedan seems like a niche product. Not too many people have $50K to drop on a vehicle that's really only good for a daily commuter (300 mile range and 45 minutes for a 'quick charge' make it impractical for long road trips). I'm not saying there's no market, I'm just pointing out some limitations (mostly the price - I think I can live with a 300 mile range).

              Electric vehicles are awesome, and I'm glad that Tesla continues to innovate and improve. Hopefully they can invest th
              • Re: (Score:3, Insightful)

                by cusco (717999)
                What's the problem with a 300 mile range? I've never understood that. That's five hours of driving at 60 mph, which far exceeds what most family sedans will ever need. If I'm going to travel more than 300 miles I'm letting someone else (pilot, engineer, bus driver, etc.) do the driving for me. Even on my most ridiculous days at work I'm not driving more than two hours from home.

                If my neighbors will cough up $70,000 for a Land Rover or H2 then I don't see that price point as an issue, either. Especia
          • by qortra (591818)

            No revenue stream now; no revenue stream until 2012.

            I thought they were selling the current roadster through 2011 [wired.com].

            What, we also need sales?

            They are aware that they need sales. As I mentioned before, they have at one point turned a profit (though they aren't right now, as an anon pointed out). The co-founder of Tesla, Elon Musk [wikipedia.org] previously co-founded Paypal which was (is) quite profitable. I don't think that Musk needs to be schooled on how to make a business plan.

            It really depends on how well they can market the roadsters

            I would think it would depend on how well they can market their Model S since that will be their bread and butter starting

            • I don't think that Musk needs to be schooled on how to make a business plan.

              While his previous business was successful, it depended heavily on two key aspects: the revenue stream came from taking "off the top" of what amounts to providing a simple service, and it depended very heavily on one key player for the majority of its revenue: eBay.

              This is different. His company will be required to produce a physical good with a warranty, which will have to meet expectations and requirements. When PayPal began, there were no real precedents to meet because it was a fledgling market

  • That's a reversal (Score:3, Interesting)

    by Mad-Bassist (944409) on Tuesday June 29, 2010 @01:44PM (#32734608) Homepage

    I distinctly remember them saying a few years ago they didn't want to go public with the company so they'd retain complete control.

    Maybe this is a good thing to grow the company, but will being beholden to the stockholders be a problem down the road?

    • Re: (Score:2, Insightful)

      by ImABanker (1439821)
      My guess is that the company weighed the merits of continuing to exist against the issues of giving up control. They've lost over $250MM over the last few years and are probably still looking at a few years of losses ahead of them; that money has to come from somewhere. It might as well be public shareholders.
      • I thought they got a big loan from the government at obscenely low interest rate for a venture capital startup? (It was the program intended as a giveaway to the failing Big Three but dressed up as a program to increase fuel efficiency, and Tesla apparently called their bluff.)

        • by loshwomp (468955)

          I thought they got a big loan from the government at obscenely low interest rate for a venture capital startup?

          Tesla is perilously low on cash, and the government loan can't be used to fund operations. Although not quite this simple, it's basically only available for capital investments.

    • Re: (Score:3, Funny)

      by Yvan256 (722131)

      will being beholden to the stockholders be a problem down the road?

      I see what you did, there.

    • I distinctly remember them saying a few years ago they didn't want to go public with the company so they'd retain complete control.

      That was before the economy imploded and Musk has now run out of cash to float the company on his own. The only choice for survival was to either attract private investment or a public offering. I'm sure Musk feels the latter is the lesser of two evils for maintaining control into the future. Once he rebuilds his fortune he can buy back enough shares to call the shots again.

  • by Anonymous Coward on Tuesday June 29, 2010 @01:46PM (#32734638)
    With the IPO at $17, and with it now trading at $20.50, some 20% higher than the already-raised IPO price, it really is probably overpriced.

    What makes TSLA an interesting business proposition (although not, for me, at $20+) is that if (and it's a huge "if") they can get production up and running in a timely fashion, they really do stand to reform the auto industry.

    The old model - manufacturers sell to dealers, and dealers sell to end users, but the dealers are franchisees who actually have no real relationship with the manufacturer. Your GM dealer sucks? Your GM dealer's mechanic sucks? It all reflects poorly on GM, and what's worse (from GM's point of view) is that all the short-term gains made by shady dealers and overpriced service departments go to the dealer, not to GM. Dealerships are profit centers for the dealer, but often breakeven or even loss centers for the manufacturer.

    Tesla's model is new to the auto industry: manufacturer sells direct to consumer, and also owns the distribution network and the service departments. That's nothing new in high tech: Apple's made a fortune using that model. The "Apple Store" gives a retail presence, but the guy at the Apple Store doesn't really care whether you buy the thing on the spot or go back home and buy it through the website.

    Applying that model to cars is interesting - and potentially groundbreaking. In the case of the Big Three, the dealer networks were an albatross around the neck of the auto manufacturers. If Tesla's model works, Telsa won't need a network of thousands of independent dealerships, because the only function of the dealerships will be to provide test drives and occasional servicing. Dealerships will be profit centers, not loss centers, for the manufacturer.

    • Their cars come in at about the cost of a Ferrari. How is that *not* overpriced for a car that cannot go as far as a Ferrari?

      How is that business model ever, possibly, going to work?

      • Economy of Scale [wikipedia.org]

        The mass-produced Model S is expected to price in at BMW and Audi levels.
      • Re: (Score:3, Informative)

        by Chris Burke (6130)

        Yeah, because that's why people buy Ferraris -- range.

        The Roadster handily beats similarly priced Ferraris in acceleration. It's not the greatest sports car ever, but in terms of performance it's quite impressive.

        I'm not going to buy one, but that's because I think a Mustang is too ostentatious for me. :P

      • by cayenne8 (626475)
        "Their cars come in at about the cost of a Ferrari. How is that *not* overpriced for a car that cannot go as far as a Ferrari?"

        Umm...where exactly can you buy a new Ferrari for under $100K? And with tax/green rebates feds and state are giving...less than that....?

        I know the avg distance between charges for the Tesla is ab out 250mi or so...but I think you will have to spend significant more $$$ on a Ferrari or any other super car to get it to beat a Tesla off the line, etc...

    • by 0123456 (636235)

      If Tesla's model works, Telsa won't need a network of thousands of independent dealerships, because the only function of the dealerships will be to provide test drives and occasional servicing. Dealerships will be profit centers, not loss centers, for the manufacturer.

      So Tesla will not only have to fund cars, but also thousands of Tesla dealers around the world? I don't think that $200,000,000 is going to go very far in that case.

    • by FooAtWFU (699187) on Tuesday June 29, 2010 @02:20PM (#32735122) Homepage
      Tesla's innovative organizational structure won't be enough to save them if their cars are a flop, though - and sure, the Roadster is a cool car and could be construed as being ahead of the competition so far, but it's also expensive, the batteries suffer from massive depreciation, and the economy's not looking spectacularly hot right now. Moreover the regular automakers aren't really that far behind (a plug-in hybrid Prius would be a perfectly reasonable substitute for the normal-consumer-oriented version of the Tesla technology).

      There's a lot of optimism priced into the stock right now. I wouldn't expect them to go out of business in the next couple of years or anything, and I might pick up a few shares if it gets down to $10-$12 or so, but a $22/share price sounds way too optimistic for my liking. I'd wait for the headline-buzz to fade a little before pouring too much money into it.

      Telsa is not GOOG. Automobiles are a capital-intensive business.

      • by GooberToo (74388)

        and the economy's not looking spectacularly hot right now

        While that's true, the people who are at such a price point are largely unaffected by the current state of the economy. In fact, a large number of those people are likely seeing new profits at this time. Last I heard they are still back ordered by several thousand units.

        While I too believe they are overvalued, I presume the price reflects what someone else already pointed out; they could be a game changer. This is likely further tempered by the fact they are pushing to enter a mid priced value point as well

    • Virtually every state in the union has dealership siting laws that stifle competition, and in particular, the sort of business model you speak of (i.e. an automotive analogue to the Apple store). When I was in the car business (aftermarket sales to parts departments) about 20 years ago, the carmakers had very limited options if they wanted to rescind a bad dealership's contract. There are limits on the number of manufacturer-owned franchises available, too, IIRC. The whole thing is a hugely rigged game in f
      • by mattack2 (1165421)

        I'm not sure if you mean the "dealerships" by "local resellers", because I essentially bought my '99 car (that I got in about April '98, yes earlier than most cars change model year) online. It wasn't through a regular Mazda dealership.

    • by westlake (615356) on Tuesday June 29, 2010 @03:01PM (#32735736)

      Tesla's model is new to the auto industry: manufacturer sells direct to consumer, and also owns the distribution network and the service departments. That's nothing new in high tech: Apple's made a fortune using that model.

      One difference is that Apple's exposure in a recall is limited to the replacement cost of a small household appliance.

      It doesn't have to "service" anything.

      Tesla has a $100K Roadster and a $65K Model S sedan in the works.

      That implies a full-scale luxury dealer showroom and auto repair garage. Not a niche in the Galleria Mall.

  • Of course all of this hinges on if they can build a product that consumers want at a affordable price. Considering todays battery technology and the current prices of oil I am betting heavily against them.

    • by qortra (591818)

      Considering [...] the current prices of oil

      The current prices of oil are immaterial to their long term value. Sure, there are people who are going to invest heavily in the IPO and try to turn a profit in the extreme short term (investors generally buy in for the long term. So, the real question is whether the cost of oil will increase significantly over the medium term (the next few years).

      Considering todays battery technology

      I have the same problem with this statement - there are way too many companies with a vested interest in developing better battery technology for the industry to

  • Isn't that half... (Score:3, Interesting)

    by ducomputergeek (595742) on Tuesday June 29, 2010 @01:52PM (#32734742)

    What the company got in the form of government loan from the stimulus package (seems like $544M was the number I remember of the top of my head). Also, isn't the CEO about broke?

    • 1) Yes. Also, several much larger car manufacturers received around the same amount or more.

      2) Yes, Elon is cash poor. All the cash is tied up in assets. This is not unusual.

      • Re: (Score:3, Insightful)

        by sunking2 (521698)
        More like tied up to hide it from his soon to be ex wife :)
        • She'll just end up with a chunk of Tesla out of his 65% he can't divest himself (due to the conditions of the DOE loan) and a chunk of SpaceX.
  • by sshir (623215) on Tuesday June 29, 2010 @01:54PM (#32734764)
    I think Warren Buffett said that as a rule companies which pioneered most revolutionary technologies, those which changed our lives in profound ways, didn't make money for original investors... Especially in transportation (think airlines, car companies etc.)
    • by wdavies (163941)

      Indeed, and Google is a classic case in point. It wasn't Altavista, Infoseek, Excite, or even GOTO (remember them, they invented bidded search ads), it was Google that came after and put together a very scalable and flexible architecture. They refined the standard IR algs, refined bidded ads, etc as well, but they weren't the first movers. Same goes for Ford, and I suspect Boeing (hello, Wright Brothers Airlines anyone?)

      Its the person that gets the large scale infrastructure right that wins. What is the cor

  • by Chris Burke (6130) on Tuesday June 29, 2010 @01:58PM (#32734824) Homepage

    I have to admit though I'm a little disappointed they didn't get the stock ticker COIL.

  • $226 million? Double that and they could probably build and tool their own automobile manufacturing factory. Well, not in the United States, that would be a lot more expensive.
  • Their cars run on DC motors (or at least get power from a DC source). Yet the company is named after a man who is acknowledged as the father of the alternating current (at least in the US).

    Otherwise I think they have a fine product (although I cannot afford it) and I hope them well. Furthermore if the company name helps to make Nikola Tesla better known in this country, I think that would be great as I view Tesla as amongst the greatest scientists to ever work in the US.
    • by Thelasko (1196535) on Tuesday June 29, 2010 @02:23PM (#32735176) Journal

      Their cars run on DC motors (or at least get power from a DC source). Yet the company is named after a man who is acknowledged as the father of the alternating current (at least in the US).

      Only the batteries are DC. The motor is AC and driven by an inverter in the car's Power Electronics Module. [howstuffworks.com]

    • by Animats (122034)

      Their cars run on DC motors...

      No, like most modern high-powered variable speed motors, they're synchronous polyphase AC motors driven by a variable frequency drive. One of the confusing issues in this area is that small motors of this type are referred to as "brushless DC" motors, while larger ones are called AC motors driven by variable speed AC drives.

      • by loshwomp (468955)

        No, like most modern high-powered variable speed motors, they're synchronous polyphase AC motors driven by a variable frequency drive.

        Close, but no: While synchronous motors are indeed most common in shipping vehicles today, Tesla, like AC Propulsion (from which Tesla licensed its technology) uses asynchronous AC motors.

        One of the confusing issues in this area is that small motors of this type are referred to as "brushless DC" motors, while larger ones are called AC motors driven by variable speed AC drives.

        The distinction is not one of size. Brushless DC motors are really synchronous AC in nature, with permanent magnets and zero field slip. These can be small (e.g. driving the fans in your computer) or large (the electric motor in a Prius). ACP and Tesla use asynchronous motors with field slip. These motors use no perma

    • by nido (102070) <nido56&yahoo,com> on Tuesday June 29, 2010 @02:30PM (#32735286) Homepage

      Only One Thing I Dislike About Tesla Motors... Their cars run on DC motors (or at least get power from a DC source). Yet the company is named after a man who is acknowledged as the father of the alternating current (at least in the US).

      /methinks Tesla himself would be disappointed that "Tesla" Motor's cars require batteries, when his Black Magic Touring Car [evworld.com] ran on free energy delivered through a "dozen vacuum tubes -- 70-L-7 type -- and other electrical parts".

      Around the turn of the century Tesla concluded that it would be possible to transmit electrical power without wires. To optimise results, he chose to experiment at high altitude, where the air was thinner and therefore more conductive. As a result he ended up building a research laboratory in Colorado Springs where he conducted some of his most extraordinary experiments; tests that even to this day are shrouded in mystery. Tesla theorised that unlimited amounts of power could be transmitted anywhere on earth, without wires and with virtually no loss of energy. It is not clear exactly how he intended to do this, but right up until the end of his life he maintained that it was quite possible and that he only needed sufficient funds to make it a reality.

      The funds however were not forthcoming, and Tesla was eventually forced to abandon his Colorado experiments in what was to become a recurrent feature in his life; no money or insufficient finance to pursue an idea . . . but a constant stream of new ideas.

      -Nikola Tesla: Maverick, Visionary and Master of Light [wordpress.com]

      • Re: (Score:2, Insightful)

        by SnarfQuest (469614)

        He was also nuttier than a Snickers bar. He had several impressive inventions, but in his "normal" life, he did many strange things.

    • The Roadster uses a 3-phase induction motor (i.e. ac motor). Still working on that wireless ac battery.
    • Re: (Score:3, Informative)

      by evilviper (135110)

      Their cars run on DC motors (or at least get power from a DC source). Yet the company is named after a man who is acknowledged as the father of the alternating current (at least in the US).

      Tesla had many accomplishments. While AC is an important one, so is radio communications, and the like. Some of his accomplishments are in the DC realm, at least due to having worked for Edison early in his career.

  • The last 10 years I've gone from knowing zilch about the financial industry to having a trust level of zilch. I've watched way too much fraud, IPOs of companies designed to dazzle investors and little else, and reckless greed that have combined to produce scores of great sounding ideas like this one. I simply have no way of telling whether this company stands a chance of creating a real product, or if they'll putter around burning through investor cash until everyone figures out It'll never work and it pr

    • Their cars ARE REAL.

      This isn't like vaporware.

      They have a legit chance to change the auto industry. I would love to support them.

      • By *real*, I mean viable. Are these cars ever going to be more than toys for the rich or will the technology filter down to the general consumer? This is what I can't figure out yet.

    • by Nadaka (224565)

      Here is at least one indication...

      They do already have a real product. The tesla roadster is being built and sold right now.

      They also have a working prototype of their model S luxury sedan and need the capital to build their first mass production facility.

      Its one thing to assemble a custom ordered high performance sports car by hand, but the semi-mass production required for a luxury sedan requires a factory.

  • Stumped. (Score:3, Funny)

    by S-100 (1295224) on Tuesday June 29, 2010 @04:52PM (#32737518)
    I was going to make a brilliant analogy to the car business, but I can't think of one...

If money can't buy happiness, I guess you'll just have to rent it.

Working...