I noted yesterday that the Tesla bears might be briefly “proven right” this week if management announces a secondary offering to raise capital for the giga-factory. Given Tuesday morning’s upgrade by Morgan Stanley, this is a perfect storm for the Tesla bears and the perfect environment for a secondary.
According to Yahoo Finance, the company has 122 million shares outstanding. Issuing an additional 5 million would dilute shareholders about 4%, but could raise a cool billion in working capital. The more capital Tesla brings to the table, the more leverage they would have in the battery project going forward.
Adam Jonas at Morgan Stanley raised his TSLA target this morning from $153 to $320 based on Tesla’s potential to disrupt the electric utility industry if the company were to develop a super-battery.
Is this a pipe dream? A research group at Northwestern University recently reported fabricating a lithium ion battery with 4 times the energy storage of current models, while still demonstrating long life.
Newton’s 1st Law of Motion notwithstanding, I know how tempting it is to try to pick a top in a market or a stock, especially if one is oriented toward fundamentals. This is why I recommend trading or investing in the direction of a trend. “Trend” has both technical and fundamental metrics, and in the case of Tesla, they are aligned.
Remember, top pickers will be right once, whereas trend followers will be right over and over.
FD: Long TSLA
