Baillie Gifford Ready To Double Down On Tesla (TSLA) If Needed
One of Tesla’s largest shareholders, Baillie Gifford & Co, noted that it was willing to inject more money into the automaker in the event that another capital raise was needed. As of June 30th, the firm owned 7.72% of outstanding shares, or 13,171,801 shares, valued at nearly $4.4 billion at the current stock price. (That’s billion with a “b.”)
“If he (Tesla CEO Elon Musk) needs more capital, we would be willing to back him,” partner at Edinburgh-based Baillie Gifford Nick Thomas said to The Times.
The announcement comes after the stock rallied from a favorable shareholder letter and earnings call, a boost in the stock from the mid-$260 range up to $330 over the course of a few big trading days. The tech-heavy investment firm is heavily invested in tech stocks, with its top 5 holdings comprised of Amazon, Alibaba, Illumina Inc, Tesla, and Baidu.
For its part, Tesla CEO Elon Musk has stated that he does not see the need for any more capital raises through debt or equity in the company’s future. He noted on the 2018 Q3 earnings call that the company was profitable at its current operating level, generating $312 million in GAAP income and $881 million in free cash flow in the third quarter alone.
Tesla’s vehicle production charts are indeed tracking along an exponential curve and that growth shows no signs of stopping as the company is working towards new factories and new vehicles slated for 2020 that will dwarf its current production levels.
The Tesla Model Y CUV is expected to generate demand in excess of the record breaking Model 3, which is already pulling in over $1 billion in revenue per month (!!), making it the best selling car in the USA in terms of revenue. Stack that on top of the 2020 launch of the Tesla Semi and the second-generation Tesla Roadster supercar and 2020 is going to put Tesla’s mettle to the test once again as it seeks to launch multiple production vehicles concurrently for the first time in its history.
Tesla Gigafactory 3 outside of Shanghai, China will start producing the Model 3 and Model Y for Chinese customers in 2020.
Prior to last week, all of these plans for the future rested on the company’s ability to turn a profit, and now that it has, the bulls have been reinvigorated in their support of the company while more than a few bears have changed their tone.
Source: Reuters
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