Just a few days ago Tesla effectively ruled out any form of fundraising because they didn’t need the cash. The company received $1.1 billion in cash flow in the final three months of 2019 and were expecting to be cash flow positive going forward. Again, fast forward just a few days and the company is now tapping shareholders for $2 billion. The latest in a long line of fundraising exercises which has many investors calling foul. However, investors pushed the share price to heady levels so can you really blame Tesla?
I’m not really sure how investors can complain that Tesla is taking advantage of the recent share price rally to raise funds – they pushed shares to those levels. While yes, management are investing their own money in the fundraising, there is a feeling that the company is raising money when it can rather than when it needs to. Can you really blame them? History shows that Elon Musk can put this money to very very good use!
Is there a sense of manipulation/share price support? Aside from the fact that all analysts seem to have turned ultra-positive in the short term, why would the shares continue to race ahead in the knowledge that there is a fundraising in the offing? Strange but true…..
While many would have you believe otherwise, the coronavirus will have a significant impact upon short-term worldwide economic performance. This in turn will see stock markets consolidate at low levels therefore we may see a number of companies trying to sneak in a last-minute fundraising very soon. Keep your eyes peeled!
