Connect with us

Investor's Corner

Tesla (TSLA) secures Model S, 3, X bonds quickly for a steal

[Credit: Harbles/Twitter]

Published

on

Tesla’s (NASDAQ: TSLA) lease-backed bonds have quickly been bought up by the company’s enthusiasts and long-term investors, and the electric automaker was able to borrow its $700 million loan at a cheaper level than anticipated initially.

Earlier this week, Teslarati reported that Tesla would use leases of its Model S, Model 3, and Model X vehicles to back a $779.53 million bond. It marks the first time that Tesla was using a debt deal in 2020, but the company had used them once in 2019 and twice in 2018.

Tesla’s newest vehicle, the Model Y, was not included in the bond offering because the automaker has only been leasing the electric crossover for a few weeks.

Leases on the Model S sedan and the Model X SUV make up half of the collateral for the bond, while the other half comes from the Model 3, which is the company’s most popular vehicle.

The Model 3 was the highest-selling EV in the world in June, selling more than three times the amount of units of the second-place car, the Renault Zoe.

Advertisement

Tesla offered eight different classes of bonds, a majority of which carried mostly top AAA ratings from Moody’s Investors Service. The bonds would mature for investors in 2.7 years or less.

Tesla encountered high demand during the week because of the bond deal that was tied to the leasing program for its electric cars. Investors ate up the offered bonds, and Tesla was able to borrow more than $700 million at a cheaper rate.

According to MarketWatch, its most significant chunk of bonds was valued at $215 million and would mature in 1.1 years. This portion of the bonds “cleared the market at a spread of 35 basis points above a risk-free benchmark to yield .56%.”

Tesla’s Ba2-rated bonds that mature in 2.71 years cleared at a yield of 4.6%, an investor who tracked the offering said. Ba2 bonds are significantly more risky than other types of bonds because they are judged to have speculative elements and are usually subjected to higher credit risk.

This marks the first time Tesla has used the technique during the coronavirus pandemic. The electric automaker headed by CEO Elon Musk has been broadly recognized as one of the few companies to gain economic momentum at a time where consumers are not spending money. Unemployment rates continue to soar in the United States, but Tesla is hiring, ramping production of its vehicles, and has managed to increase its stock price significantly since the beginning of the year.

Advertisement

The company is also opening a new U.S. production plant in Austin, Texas.

Tesla delivered 90,650 vehicles during the second quarter of 2020.

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

Joey has been a journalist covering electric mobility at TESLARATI since August 2019. In his spare time, Joey is playing golf, watching MMA, or cheering on any of his favorite sports teams, including the Baltimore Ravens and Orioles, Miami Heat, Washington Capitals, and Penn State Nittany Lions. You can get in touch with joey at joey@teslarati.com. He is also on X @KlenderJoey. If you're looking for great Tesla accessories, check out shop.teslarati.com

Investor's Corner

Tesla gets its best analysis from Morgan Stanley as ‘it’s all about to change’

He maintained its ‘Overweight’ rating and the $410 price target Morgan Stanley had on the stock.

Published

on

(Credit: Tesla)

Tesla has gotten perhaps its best analysis from Morgan Stanley in quite some time, as the Wall Street firm claims that “it’s all about to change.”

That phrase could be used for both the company’s status and the world in general.

Analyst Adam Jonas said in a new note on Thursday to investors that Tesla could be one of the major winners in terms of the global transition from what it is now to what it will be.

He describes the global shift that will occur over the next few years:

“Have you interacted with a robot today? Have you even seen a robot today? No? Well, take a mental picture because it’s all about to change. When we meet someone who has never been in a Waymo or a Tesla Cybercab (which is most people), we frequently see a wince and a response such as ‘I’m not sure I’d feel comfortable getting in a car without a driver.’ We imagine going back in time to 1903 and asking people if they’d feel comfortable in an airplane.’”

Advertisement

The same technological revolutions that have occurred over the past 150 years will continue to occur again and again. We are on the verge of another, Jonas believes, as companies like Tesla are working on artificial intelligence tech, which includes changing the way we look at things like transportation and labor.

Jonas includes an interesting tidbit in his note about how humanoid robots could change wages, and how it could work into the advantage of Tesla, especially as it is developing its own Optimus robot:

“We estimate 1 humanoid robot at $5/hour can do the work of 2 humans at $25/hour, generating an NPV of approximately $200k/humanoid. 1 robot shaped car can potentially drive down cost/mile of a ride share vehicle to <$0.20 mile (1/10th human-driven ride-share).”

Jonas sees Tesla as a key player in how AI will impact things like manufacturing and various automotive industries, and he believes there is long-term potential for AI, robomobility, and even autonomous eVTOL platforms.

Tesla stock: Morgan Stanley says eVTOL is calling Elon Musk for new chapter

Advertisement

He maintained its ‘Overweight’ rating and the $410 price target Morgan Stanley had on the stock.

Continue Reading

Elon Musk

Tesla stock gets crazy prediction from CEO Elon Musk

Musk says this is what it would take to be a millionaire from a Tesla investment right now.

Published

on

A red Tesla Roadster driving around a turn
(Credit: Tesla)

Tesla stock (NASDAQ: TSLA) got a crazy prediction from CEO Elon Musk recently, as the future of the company seems to be moving more toward AI, autonomy, and robotics, and away from automotive, which is what it has traditionally been recognized as.

Over the past few years, as Tesla has prioritized its Full Self-Driving suite, its rollout of a dedicated Robotaxi program, and the development of the Optimus bot, the company has gained a new reputation from analysts.

It was always looked at as a stock with tremendous potential by many Wall Street firms, some more than others.

The most bullish analysts, like Cathie Wood of ARK Invest, believe the company will eventually reach a multi-trillion-dollar valuation and a share price of over $2,000. Her $2,600 price target does not include any contributions of Optimus. Instead, it leans on Full Self-Driving and Robotaxi.

Tesla tops Cathie Wood’s stock picks, predicts $2,600 surge

Advertisement

Based on where the company is now, there are a lot of potential catalysts. The Robotaxi expansion, as well as affordable vehicles, its prowess in AI and Robotics, and its powerful energy division are all arguments for investment.

One X user said that a $150,000 investment in Tesla right now would likely make you a millionaire. Musk said he thinks that sentiment is “probably correct.”

He’s echoed this belief in recent earnings calls, including the one for Q2, which happened in July:

Advertisement

“I do think if Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world. A lot of execution between here and there. It doesn’t just happen. Provided we execute very well, I think Tesla has a shot at being the most valuable company in the world. Obviously, I am extremely optimistic about the future of the company.”

Tesla is trading at $316.50 at the time of writing, and has a market cap of just under $1 trillion.

Continue Reading

Elon Musk

Tesla stock gets another analysis from Jim Cramer, and investors will like it

“Tesla is morphing right now. It’s in transition from being a car company to being a technology company.”

Published

on

Credit: CNBC Television/YouTube

Tesla stock (NASDAQ: TSLA) got its latest analysis from Jim Cramer, and investors will like what he has to say.

Cramer has flip-flopped his thoughts on Tesla shares many times over the years. One time, he said CEO Elon Musk was a genius; the next, he said Ford stock was a better play. He’s always changing his tune.

However, Cramer’s most recent analysis is of a bullish tone, as he talks about the company’s evolution from an automaker to a tech powerhouse. He made the comments on CNBC’s Mad Money:

“Tesla is morphing right now. It’s in transition from being a car company to being a technology company. You wanna be in there because the tech is worth a lot more than what it’s selling for right now. Don’t care where you bought it, care where it’s going to.”

Tesla has always been looked at by the mainstream media as an automaker. While that is its main business currently, Tesla has always had other divisions: Energy, Solar, Charging, AI, and Robotics. Some came after others, but the important point is that Tesla has not been an automaker exclusively for a decade.

It launched Powerwall and Powerpack in April 2015, marking the start of Tesla Energy.

But Cramer has a point here: Tesla is truly becoming much more than a car company, and it is turning into an AI and overall tech company more than ever before. Eventually, it will be recognized as such, more so than it will be as an automotive company.

Cramer’s comments also follow a recent prediction by Musk, who stated on X that he believes a $150,000 investment in Tesla shares right now would eventually turn someone into a millionaire:

Advertisement

Musk has said he believes Tesla could be headed to a serious increase in valuation. Eventually, it could become the most valuable company in the world. He said this during the Q2 Earnings Call:

“I do think if Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world. A lot of execution between here and there. It doesn’t just happen. Provided we execute very well, I think Tesla has a shot at being the most valuable company in the world. Obviously, I am extremely optimistic about the future of the company.”

Advertisement
Continue Reading

Trending