Tesla Motors Inc raises 2 billion dollars in bond sale, shares up 619% in 12 months

The shares of Tesla Motors Inc., which is a designer, developer, manufacturer and seller of electric vehicles and advanced electric vehicle powertrain components, increased by almost 70% in 2014 and marked a 619%-jump over the last 12 months. The company raised 2 billion dollars from the largest convertible bond sale in the U.S. in more than a couple of years as it boosted its offerings size due to strong investor demand.

As hybrid securities, convertible bonds provide issuers with the opportunity to offer debt with lower coupons. However, the securities allow the investors to transform the bonds into stock if the share price of the issuer reaches a predetermined premium during the bonds term.

The income from the sale is said to be invested by Tesla into building a large new battery factory. These plans are believed to have boosted the shares of the company to a record high this week. As a result, the company is now considered as the highest-flying automobile stock in at least twenty years.

One of the analysts working for Baum & Associates – Mr. Alan Baum, said in an interview for Bloomberg: “Its combination of technology, glitter and utility, while being a leader in a segment that has a lot of potential, is leading buyers and investors to Tesla. They’re leading a new segment with a product that transcends the segment it’s in.”

As reported by the Financial Times, Tesla Motors Inc. reached a market capitalisation estimated to 31 billion dollars after its recent share price rally. The company has set a target of selling 35,000 vehicles in 2014.

Liz Jarvis-Shean, who is a spokeswoman of Tesla Motors Inc. refused to make any comments on a report made by the Financial Times, which revealed that the convertible notes offering of the company is going to be increased to as much as 2.3 billion dollars from an initial target estimated to about 1.84 billion dollars.

Tesla Motors Inc. fell by 0.18% on Thursday and settled at $252.54 per share, marking a staggering one-year change of +619.49% and valuing the company at $31.11 billion. According to CNN Money, the 8 analysts offering 12-month price forecasts for Tesla Motors Inc. have a median target of $170.00, with a high estimate of $205.00 and a low estimate of $65.00. The median estimate represents a -32.68% decrease from the last close.