Tesla Takes A Breather Passing $184/Share Due To Outstanding Convertible Debt, Warrants

Tesla has been on a tear in 2013, showing its first quarterly profit, raising $1 billion in cash, paying off its government loan, and enjoying a more than 400% gain in its share price year to date.

Today, however, Tesla slipped 6%, settling around the $180 per share mark. After having risen to a 52 week high of $191.83, Tesla has eased. A good portion of the slip can likely be attributed to some early terms that got outdated quickly due to Tesla's meteoric rise.

There actually appear to be a few factors, including declining institutional investment and its stock price reaching levels that impact the convertible notes and warrants that Tesla sold in May. At that point in time, Tesla traded for under $100 per share.

In its August 7th investor letter, Tesla spelled out its fundraising activity during the quarter, including the sale of 4.5 million shares and the raising of $660 million in convertible debt. About 45% of those funds were used to repay a Federal loan, and a fee for repaying the debt ahead of schedule.

The convertible debt carries a 1.5% coupon rate, which is quite low, and on the lower end of expectations set at the time of sale. As the Wall Street Journal notes, the size of the convertible note offering was increased twice to $600 million, a figure that could rise to $660 million if "underwriters purchase additional shares."

They did. So, the full tally of new cash for Tesla tipped past the $1 billion mark.

Then its stock continue to rise. Here's Tesla on how it raised the set up the convertible debt to avoid potential dilution. Recall that Tesla traded for under $100 per share at the time of its issuance:

To mitigate the potential dilution impact from the issuance of convertible debt to our common shareholders, we also entered into a call spread to increase the effective conversion price from $125 to $184 per share. The call spread allows us to avoid incremental dilution from the convertible debt until our common share price climbs past $184.

Tesla recently went past the $184 per share mark, and then saw its stock fall. The company also issued warrants this May - the time of the share sale and debt issuance - that had a strike price of, you guessed it, $184.84. Those warrants are for 5.3 million shares, or around $1 billion at current valuation.

So, it seems that Telsa didn't anticipate its stock to perform as it has, and therefore the financial controls - likely set up for the long-term, given that the convertible debt were not due until 2018 - became somewhat moot. Crossing the $184 mark, Tesla's stock unlocked investor agency, pushing its share price down.

Add to that the fact that Tesla has had an incredible run over the summer that some are citing as perhaps too optimistic and we could be seeing more pullback over the next few weeks.

For more on the potentially dilutive effects of the convertible debt, which have been hedged, this chart is for you.

Image Credit: Wendell Oskay / Flickr CC

New Jersey’s Motor Vehicle Commission Bans Direct Tesla Sales

Five day ago, New Jersey Gov. Chris Christie was quoted saying: "We need to talk about the fact that we are for a free-market society that allows your effort and ingenuity to determine your success, not the cold, hard hand of the government." On Tuesday, his state's Motor Vehicle Commission, with the backing of the Christie administration, effectively blocked Tesla from selling its electric vehicles directly in the Garden State. It's a rule that only an auto dealer can love, effectively requiring a middleman be inserted into the sales process. Tuesday's vote was the latest skirmish in a series of state battles between auto dealer trade groups and the electric car manufacturer, with varying results. A spokeswoman for the Motor Vehicle Commission confirmed the rule passed and will go into effect in April.

Read the full story at re/code.

Inside Tesla's Supercharger Partner Program: The Costs And Commitments Of Electrifying Road Transport

Tesla is building a nationwide network of Supercharger stations in the U.S. to help give its growing fleet of consumer vehicles the juice they need to conquer the nation's highways, and now we at TechCrunch have an inside look at how they're approaching partners to help them expand. Tesla's footing the bill for the Supercharger spots, asking only for time and access from partners with parking lots, and promising the keys to the future in return.

For "prospective hosts" of Tesla Superchargers, the ask isn't too steep: Tesla covers all costs, upfront and ongoing associated with installing supercharger stations, according to the documents obtained by TechCrunch. That covers maintenance, as well as power costs, with Tesla optionally offering to install a dedicated meter just for the charging station alone, from which the bill will go directly to Tesla itself.

The cost for Tesla is between $100,000 and $175,000 depending on the station, and a lot of those come from the permanent modifications needed at the site to support the Supercharger itself. It's more expensive than putting in a charger for a standard electric car, like a Nissan Leaf for instance, but the Supercharger can deliver around five times the power of those stations in the same amount of time, and is more demanding in terms of infrastructure changes as a result.

A property owner doesn't have to stake any monetary commitment, but it does have to offer up between four or five spaces on average, plus around 200 to 600 square feet for Superchargers and equipment. Most agreements involve four "dedicated" stations, designed such that only Tesla owners can use them (prevents a driver arriving and not being able to find a spot), as well as between four and six additional stations that can accommodate both normal cars and provide supercharging for Teslas. This doesn't need to be prime real estate either, though Tesla does stipulate it be well-lit, and close to existing power infrastructure if possible.

Partners are asked to commit to the program for a minimum of five years, with an option to expand, and most agreements range from five to ten years. The length of the commitment required reflects the large cost of the initial install. In exchange, Tesla is selling essentially the image benefits associated with its brand; partners get the mystique and influence of being a Tesla location, attracting its drivers to their on-site businesses, yes, but also offering up press and social media profile bumps. Plus, for companies with environmental sustainability programs and priorities, the brand association benefits are obviously attractive, too.

The Tesla docs also show a high rate of usage at its stations, with some installations seeing as many as 17 sessions per day during their peak usage periods, a fact which it can use to convince partners that the space provided will result in more traffic to their stores and businesses. Installation of the Supercharger requires between 12 and 20 weeks to complete, but only between two and four of those actually take place on-site, with the rest consisting of paperwork, business arrangements and obtaining local permits and approvals.

If Tesla's footing the entire bill, it might seem like a no-brainer to get a Supercharger installed at your roadside business, but there is a significant cost involved in terms of construction time and space committed, so it's understandable that the electric car company has to make its case through these pitch documents. For us, they provide an interesting look at what's required from all parties involved to help pave the way for the future of electric transport.