Posted on February 18th, 2020
Tesla, Inc. (TSLA) has had a phenomenal past 52 weeks, with its stock rising over 162.3%, in stark contrast to the S&P 500’s gain of about 22.7%. As fourth quarter filings begin to come out, investors are first now getting a peek at who’s been buying the shares of the electric vehicle maker.
Tesla completed a $2 billion secondary offering on February 14, 2020, combined with a $300 million underwriter option. According to Bloomberg, Tesla’s capital raise priced at $767 per share, representing about a 4.6% discount from a closing price of $804 on February 13, 2020. Tesla’s CEO, Elon Musk, is expected to have bought $10 million worth of stock and that Oracle’s co-founder and billionaire, Larry Ellison, purchased $1 million worth in the offering.
Look Who’s Buying
It is now coming to light which buyers have helped to push Tesla’s stock significantly higher. According to the latest 13F filings for the fourth quarter, JPMorgan Chase & Co. purchased roughly 2.2 million shares, bringing its total position to approximately 2.5 million shares. Meanwhile, Renaissance Technologies LLC increased its holdings by almost 3.3 million shares to bring its position to about 3.9 million shares.
There have also been some noteworthy long-term holders adding to their positions, with Baillie Gifford & Co. buying approximately 375,000 shares and Capital World Investors buying about 450,000 shares, bringing their positions up to approximately 13.8 million and 10.2 million, respectively.
Estimates Are Encouraging
Tesla reported fourth quarter earnings per share (EPS) at $2.14, with revenue of $7.38 billion. However, analysts have been boosting their revenue and earnings estimates for the next two years. Analysts and investors appear drawn to the favorable probability of steady growth. Revenue in 2020 is expected to rise by 30.3% to approximately $32 billion, and earnings are forecast to rise to $8.68 per share from $0.20 per share in 2019. Meanwhile, that strong growth is projected to continue into 2021 with revenue increasing by an additional 28.1% to about $41 billion, and earnings growth of about 69.2% to about $14.68 per share.
Tesla’s Capital Raising Efforts Called a Smart Move
Wedbush Securities’ analyst, Dan Ives, calls the capital raise by Tesla a smart move, which will enable the company to take advantage of being back in a position of strength. With the push still ahead for autonomous automobile technology and the manufacturing possibilities from Tesla’s new Gigafactory 3. Wedbush sees a long-term bull case scenario on the stock of $1,000 due to Tesla’s ability to increase production for demand in China during the course of 2020 and 2021.
While the bull/bear debate over Tesla’s stock may continue, it appears, for now, the bulls may be winning. Despite calls for the stock as a bit rich for some, it seems some investors are willing to bet that with a little bit of patience there could be a huge payoff.