Model 3 and Elon Musk
Yesterday, Tesla announced that it’s looking to raise $1.15B on Wall Street by selling new shares and convertible securities. The reason for this urgent need of cash isn’t difficult to guess. Elon Musk has already stated that the affordable Model 3 project has pushed the company “close to the edge”. Model 3, in case you forgot, will start at around $35,000 before tax incentives and is scheduled to go into production this upcoming July.
Very often, such news regarding a big share sale impact company’s share price badly, since the value of investors’ holdings appears to be diluted. However, it appears that Musk has plenty of fans on Wall Street and instead of decreasing, according to Bloomberg, Tesla shares rose in late trading.
Tesla’s offering will be composed of $750 million in convertible debt and $250 million in shares. According to official statements, this capital will allow the company to reduce risks involved in launching the Model 3 sedan as well as strengthen its balance sheet.
Musk said that the cash raising isn’t vital to the release of the Model 3, but that it would be wise.
Will Model 3 answer expectation and change the traditional automobile industry, and what will happen to Tesla shares? After surging over 49% between December 1st 2016 and February 14th 2017, Tesla shares decreased 8%. Will the news be enough to change the trend?
At iFOREX you have the opportunity to invest in Tesla share CFDs, as well as in the share CFDs of many other vehicle companies, and potentially benefit from any change in price – up or down.
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