Tesla higher after raising money

Tesla offers $650M of shares, $1.35B of notes to ‘strengthen’ balance sheet

Tesla Model 3 named Popular Mechanics' Car of the Year
Tesla higher after raising money, Stockwinners

Tesla (TSLA) confirmed in a press release that it disclosed this morning offerings of $650M of common stock and $1.35B aggregate principal amount of convertible senior notes due in 2024 in concurrent underwritten registered public offerings.

In addition, Tesla has granted the underwriters a 30-day option to purchase up to an additional 15% of each offering.

Elon Musk, Tesla’s CEO, will participate by purchasing $10M of common stock.

The aggregate gross proceeds of the offerings, assuming full exercise by the underwriters of their option to purchase additional securities, would be approximately $2.3B before discounts and expenses.

Concurrently with this offering of common stock and pursuant to a separate prospectus supplement, Tesla is offering convertible senior notes due 2024 to the public in an aggregate principal amount of $1.35B, or $1.55B if the underwriters for the concurrent convertible notes offering exercise in full their option to purchase additional notes.

Tesla intends to use the net proceeds from the offerings to “further strengthen its balance sheet, as well as for general corporate purposes.”

The notes in the offering will be convertible into cash and/or shares of Tesla’s common stock at Tesla’s election. The interest rate, conversion price and other terms of the notes are to be determined.

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

Wolfe Research

#Wolfe Research analyst Daniel Galves downgraded Tesla to Peer Perform from Outperform and cut his price target for the shares to $265 from $375. Tesla’s product is “truly differentiated” with a multi-year sustainable advantage in long-range electric powertrains and highly-assisted driving, Galves told investors in a research note. However, the analyst says it is now clear that “broad consumer awareness doesn’t happen overnight.”

In the interim, he believes shares of Tesla will be driven by investor confidence in the company’s medium-term demand and earnings power. And #Galves no longer has confidence in substantial free cash flow at Tesla until its Model 3 volumes rise to 7,000 per week. As such, the analyst moves to the sidelines saying he can no longer recommend the shares.

Shares of Tesla are up 4%, or $9.09, to $243.55 in Thursday’s trading following the news.

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Barron’s is bullish on Goldman Sachs, bearish on Snap On

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:  

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review of stocks to buy, stocks to watch

BULLISH   MENTIONS:

Biotech could be headed for a revival – Big biotechnology stocks could be headed for a revival, Ben Levisohn writes in this week’s edition of Barron’s. Biogen (BIIB) and Celgene (CELG) finished the week higher, AbbVie (ABBV) gained 14% after releasing earnings, and Gilead (GILD) rose 5% after a rating upgraded, he notes. Overall, the sector should also benefit from increased merger activity, lower taxes, and a less-onerous regulatory regime, the report adds.

Goldman Sachs regaining ‘its touch,’  – While Goldman Sachs’ (GS) overall financial results have been strong, with three out of four of its main business units thriving, trading has been reduced to crumbs, Jack Hough writes in this week’s edition of Barron’s. Further, its competitor, Morgan Stanley (MS), surpassed it in market value for the first time in a decade, despite Goldman Sachs shares hitting a new 52-week high, he notes. Nonetheless, this makes an opportune time to buy Goldman Sachs stock, he argues, as the bank is more diversified than it was before the financial crisis and as it becomes more prosperous given expansion in mergers, lending and money management.

Domestic companies to go on spending spree – Capital spending has picked up and shows signs of staying strong this year, with help from tax overhaul as it lowers the corporate tax and offers a chance for companies to repatriate overseas cash, Lawrence Strauss writes in this week’s edition of Barron’s. Apple, for instance, has announced that it expects to invest more than $30B in capex in the U.S. over the next five years, he notes.

BEARISH  MENTIONS

Investors should sell First Solar (FSLR), pocket gain – In a follow-up story, Barron’s notes that President Trump has imposed 30% tariffs on solar cells and modules, which will likely drive the panel’s prices higher and reshuffle the renewable-energy industry. First Solar’s products will be exempt from the tariff and its stock has jumped 54% since then, the report says, adding that investors should sell the stock and pocket that gain. Most solar stocks remain risky bets as the tariff will drive up prices in the U.S. and given the supply-demand imbalance, Barron’s contends.

Snap-On could miss consensus EPS this year. – Shares of Snap-On (SNA) have tooled along nicely for years, but the joyride may be over soon as potential headwinds could cause the company to miss consensus earnings per share expectations this year, Vito Racanelli writes in this week’s edition of Barron’s. An increasing number of borrowers are falling behind and recent evidence points to a slowdown in organic growth in the main tools division, the biggest of Snap-on’s businesses, he notes.


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