June 22nd, 2010 // 2:06 pm @ Shannon Arvizu
Tesla IPO stock goes on sale next week….but is it worth it? For serious investors looking for long-term growth (versus a quick buck), Tesla IPO stock is a winner and a strong signal that the industry is charging ahead.
Tesla will offer 11.1 million shares of stock next week to select investors. The company plans to sell them at a price between $14-$16 USD, raising a target total of around $167M USD.
Toyota has already earmarked $50 million of Tesla IPO stock. In return, Tesla agreed to buy Toyota’s NUMMI facility for $42 million. This partnership is a clear indication that Tesla IPO is a speculative growth stock, meaning that the primary reason to invest in Tesla now is for the long-term potential for expansion.
Investors in the clean tech transportation sector need to know that this is not the industry for the short-sighted money-maker. This is a sector that is in the steady growth mode. Millionaires will not be made overnight, but smart investors may rest assured that their money will contribute to a lucrative industry that can actually create real change for the better – if invested in the right company.
So, what are solid criteria for determining whether an electric vehicle company deserves your money?
1- Investment Partnerships: What other organizations have contributed to the growth of the company to date? In what capacity? In the case of Tesla, Toyota is a relative latecomer to give their vote of confidence to the company. Last year, Tesla succeeded in securing $465 million in loans from the U.S. Energy Department. Google, Vantage Point Venture Partners, and Daimler have also been early investors in the company as well, not to mention that CEO Elon Musk has also poured more than $70 million of his own money into Tesla.
2-Business Plan for Growth: What are the company’s projections for growth? Is the company based on the production of one model, or several? While plans for manufacturing the Model S (an all-electric luxury sedan) have been in the works for over a year now, Tesla has recently announced intentions to build three new models. These include a van, an SUV, and a cabriolet. Of course, these models are still in the sketch-up stage, but it is apparent that Tesla is thinking beyond the Roadster at this point.
3-Rockstar Technology: What kind of electric drivetrain is under the hood? What kind of batteries are used? Who has helped produce it? Tesla has worked with several reputable companies over the past few years to produce the kind of stellar driving performance that the Roadster is known for. These include AC Propulsion, Magna International, Lotus, Siemens, and Borg Warner. The company plans to supply Daimler and Toyota with its own proprietary drivetrain components in future Daimler and Toyota vehicles as well.
4-Established Demand: What kind of demand exists for the company’s vehicles? Who is their target market? Tesla has established twelve retail centers in the U.S. and Europe to promote sales of its luxury Roadster to an upscale market. As of March 31, over 1,000 Roadsters have been sold. The company believes that there is a burgeoning market for the $50,000 Model S and for the three models recently introduced. Gauging future electric vehicle demand is a little tricky at this point, but we do know that interest fluctuates with rising petroleum prices. Considering current developments in the petroleum industry and future supply projections, it is reasonable to assume that we will experience a surge in oil prices in the next 2-5 years. Demand for plug-in cars is sure to follow.
5-Wow Factor: Are you excited about the company’s product? Is this a car you can see yourself or your friends in? This is Tesla’s primary added value from the very beginning. They set out to completely revolutionize the way we view electric vehicles. No matter who you are, a little drool drips when you pass a Roadster on the street. The Model S is another sleek-looking machine bound to turn heads.
All in all, Tesla appears primed to deliver on its IPO offerings. This is a company that has played all its cards right so far. Of course, as with any start-up, there have definitely been some ups-and-downs along the way. Nonetheless, Tesla has established itself as a leader in the industry and this is one more major step towards further success.