Tesla Volts Wall Street

This is a story about how the first initial public offering (IPO) made by a car manufacturer since Ford's 1956 similar endeavor managed to take anybody by surprise. In a day when Dow Jones closed down 268 points to 9,870 and NASDAQ down 85 points to 2,135 (it was, in fact, a 2010 low for Wall Street, as the S&P 500 Index lost 33.33 points), Tesla proved to be the happy electron on the stock market's board on Tuesday.

Managing to raise $226 million in the first day (an amount which, truth be told, surprised even Elon Musk, the company's CEO), the second day of trading saw Tesla's shares moving up 40.5 percent, reaching a value at closing of $23.89 – an increase which represents the second-biggest first-day gain in IPOs made this year.

But, as it usually happens, good news for some is not good news for everybody. For some reason, it would appear the initial success of the IPO caused more of a debate, than a jump for joy.

The Oakland Tribune says Tesla is like a fairy tale for Wall Street. It comes with the promise of a bright future, but offers only bits and pieces: a net loss of $290 million since it was created in 2003, a deal with Toyota for the NUMMI facility which may or may not conclude (if not, leaving Tesla with basically no production line), a Tesla Model S product which looks great and promises much, but doesn't really exist, a broke CEO and part-owner (as Elon Musk's divorce papers revealed), a federal loan, and the list may go on and on and on.

True, all of the above is true. But is exactly the $290 million loss, the lack of a production line and the Model S which made the electric carmaker go for the board.

Tesla needs money, badly, and apparently investors are willing to give it, as is the government. It only depends on Tesla if it is to succeed on the market, or become a nemesis for traders' pockets, like Solyndra or A123.

Tesla promised, or at least hinted, in its IPO filing, that another three models will join the range: a convertible, a crossover and even a van. A lower-cost model is also planned, should the collaboration with Toyota at the former NUMMI plant materialize.

It is exactly these promises which prompted investors into throwing their money into Tesla shares.

Because, bottom line, despite all the problems mentioned by The Oakland Tribune, Tesla has been around for seven years now. It started out when nobody really believed EVs are a viable choice, but managed to move forward. Slowly, but forward. Tesla sold only 1,000 vehicles in its seven year long life. But remember, it built them while having NO production line. It lost, more than it gained, in its seven years life, but managed at the same time to develop the Model S. A model whose platform and drivetrain will spawn a new generation of electric cars.

For those investing money in Tesla, it seems the hard part for the company is over. Now, it only needs support, mostly financial. And, on Monday and Tuesday, it got it.
If you liked the article, please follow us:  Google News icon Google News Youtube Instagram
About the author: Daniel Patrascu
Daniel Patrascu profile photo

Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
Full profile


Would you like AUTOEVOLUTION to send you notifications?

You will only receive our top stories