Tesla (TSLA) Losses Steam as Investors Brace for Capital Raise
After opening up 2.7% following its earnings and production update after the close, shares of Tesla (NASDAQ: TSLA) are down 3.5%. Chatter of a equity raise can be heard across the Street with the company's capital needs expanding greatly due to the Model 3 production ramp.
With its earnings report last night, Tesla said:
"Given our plans to advance our 500,000 total unit build plan, essentially doubling the prior growth plan, we are re-evaluating our level of capital expenditures, but expect it will be about 50% higher than our previous guidance of $1.5 billion for 2016. Naturally, this will impact our ability to be net cash flow positive for the year, but given the demand for Model 3, investing to meet that demand is the best long-term decision for Tesla."
In its note to clients this morning, Oppenheimer's Colin Rusch said:
"For now, we are modeling $2.2B in an equity raise in 2Q:16 and $1.2B in senior debt in 2Q:17 to support capital spending for this year and next, with the company self-funding in 2018."