Colin Langan of UBS reiterated his Sell rating on Tesla Inc (NASDAQ: TSLA) as he's skeptical whether the recent capital raise would
suffice its liquidity needs.
Capital Raise
In its second capital raise in a year, Tesla announced a $250 million stock offering and $750 million in convertible senior
notes due in 2022. With underwriter option, Tesla expects to raise $1.15 billion, which is at the low end of the analyst’s estimate
of $1-$2 billion.
Though the recent capital raise will boost Tesla’s cash position to $4.6 billion, Langan said the lower-than-expected amount
implies another raise later if the Model 3 is delayed.
“We forecast cash burn of $2.3bn in 2017 (note first half capex guidance is $2-2.5bn) and continued burn into 2018, assuming the
Model 3 ramp starts in the second half,” Langan wrote in a note.
Cash Burn Key Risk
Langan noted that the Model 3 beta prototype is not yet approved by the board. If the launch is delayed, cash burn would be
worse, putting them close to the $1 billion cushion they need.
“[L]iquidity and cash burn remain key near-term
risks, and investors may grow weary of continued raises as this is the second capital raise in a year,” Langan added.
At last check, shares of Tesla rose 3.22 percent to $263.96. Langan has a price target of $160, implying a potential downside of
39 percent.
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Latest Ratings for TSLA
| Date |
Firm |
Action |
From |
To |
| Mar 2017 |
Bernstein |
Initiates Coverage On |
|
Market Perform |
| Feb 2017 |
Goldman Sachs |
Downgrades |
Neutral |
Sell |
| Feb 2017 |
RBC Capital |
Maintains |
Sector Perform |
Sector Perform |
View More Analyst Ratings for
TSLA
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