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Case 2 Initial Public Offering

Background: Introduction of company. What business is the company in? When was the company established?

• When did the company go public? Why did the company decide to go public?

1. What exchange lists the stock? Why did the company decide to list on that exchange. What is stock symbol?

• Who was the investment banker? Why did the company choose that investment banker? Was IPO done on an underwritten or best efforts basis? How much was paid to the investment banker?

1. How many shares were issued? What portion of the company did insiders retain?

1. What was the offer price per share? How was the offer price decided? How much money was raised?

1. Has stock price changed since IPO? What was the price at end of first day? Estimate the amount of money left on the table? What is current price?

1. What did the company use the money for?

1. Anything else that you think is interesting about the IPO

Please use APA Bibliography:

Case 2 - Initial Public Offering Background: Introduction of company. What business is the company in? When was the company established? 1. When did the company go public? Why did the company decide to go public? 2. What exchange lists the stock? Why did the company decide to list on that exchange. What is stock symbol? 3. Who was the investment banker? Why did the company choose that investment banker? Was IPO done on an underwritten or best efforts basis? How much was paid to the investment banker? 4. How many shares were issued? What portion of the company did insiders retain? 5. What was the offer price per share? How was the offer price decided? How much money was raised? 6. Has stock price changed since IPO? What was the price at end of first day? Estimate the amount of money left on the table? What is current price? 7. What did the company use the money for? 8. Anything else that you think is interesting about the IPO Bibliography: Case 2 - Initial Public Offering Background: Introduction of company. What business is the company in? When was the company established? 1. When did the company go public? Why did the company decide to go public? 2. What exchange lists the stock? Why did the company decide to list on that exchange. What is stock symbol? 3. Who was the investment banker? Why did the company choose that investment banker? Was IPO done on an underwritten or best efforts basis? How much was paid to the investment banker? 4. How many shares were issued? What portion of the company did insiders retain? 5. What was the offer price per share? How was the offer price decided? How much money was raised? 6. Has stock price changed since IPO? What was the price at end of first day? Estimate the amount of money left on the table? What is current price? 7. What did the company use the money for? 8. Anything else that you think is interesting about the IPO Bibliography: Introduction Founded in 2003, Tesla Motors is an American automobile manufacturer headquartered in Palo Alto, CA. Tesla boasts the development of leading vehicle models such as Tesla Roadster, Model X and Model S. The company deals in the design, development, manufacture and sale of both electric vehicle and electric power components of trains (forbes.com). Tesla was founded by a group of engineers with an aim of proving that electric-powered cars could outdo their gasoline-powered counterparts. As of May 2016, the company had a market capitalization of $33.5 Billion. Initial Public Offer Tesla Motors launched its initial public offer on the Nasdaq Stock Exchange on June 29, 2010. The company was able to raise $226.1 million in the IPO despite having a history for making losses since its inception in 2003. Prior to going public, the company had only reported a profit once in July 2009 (wired.com). The company went public in a bid to raise additional capital to cater for expansion. As per the prospectus, proceeds from the IPO were to be used to fund planned capital expenditures, working capital and other general uses. Specifically, the company was to use approximately $42 million to purchase the manufacturing facility for development of the Model S sedan in Fremont, California as well as a purchase of the power train manufacturing facility. For the year ended 31st December 2010, total capital expenditures were anticipated to be $100 $125 million. Tesla Motors is listed in the Nasdaq Securities Exchange; the company goes by the ticker name TSLA. Tesla's IPO was underwritten by four investment bankers; Morgan Stanley, Goldman Sachs, Deutche Bank Securities and JP Morgan. The underwriters were paid an underwriting discount of $1.105 per share totaling $14,696,500. Tesla offered 13,300,000 shares of common stock during its IPO at a price of $17.00 per share. Underwriters also reserved a total of 1.4 million shares to be retained by insiders. These shares were to be offered for sale to employees, business associates, directors, friends and family as well as customers who had purchased the Tesla Roadster and the same delivered to them by Tesla. The offer price per share was $17.00 with a total of $221.1 million being raised in the initial public offering. The offer price was priced above the $14-$16 per share planned range which was an aggressive move. The stock price has changed tremendously since the company went public. Currently, the share is trading at $251.16 as at February 3, 2016 (Yahoo-finance). This is a huge change given that the closing price on its first day on the trade floor was $23.89 per share. The share opened at $17.00 per share which leaves a total of $6.89 over the table. This shows how much investors were confident in taking a huge risk in a company that had been reporting losses since inception.As noted earlier, the proceeds were used to fund capital expansion projects, mostly the purchase of manufacturing facilities for the Model S sedan and the electric power train. Conclusion It is interesting to see how much the share price has grown over the years. From the initial price of $17.00 per share, the current share price is $251.16. An investor who purchased 1000 shares for a total of $17,000 can sell the same and make a total of $251,160. This would result in a profit of over $200,000 dollar. Not a bad sum after just 6 years of trading. References Andrejczak, M. (2010, June 29). Tesla Motors shares soar 41% in market debut. Retrieved February 03, 2017, from http://www.marketwatch.com/story/tesla-motors-ipo-opens-12above-offer-price-2010-06-29 Electric carmaker Tesla files for IPO. (n.d.). Retrieved February 03, 2017, from http://mobile.reuters.com/article/idUSTRE60S6MM20100130 Tesla Motors on the Forbes World's Most Innovative Companies List. (n.d.). Retrieved February 03, 2017, from http://www.forbes.com/companies/tesla-motors/ Tesla - Prospectus Filed Pursuant to Rule 424. (n.d.). Retrieved February 03, 2017, from http://ir.tesla.com/secfiling.cfm?filingid=1193125-10149105&cik=#D424B4_HTM_TOC51863_21 TSLA : Summary for Tesla, Inc. - Yahoo Finance. (n.d.). Retrieved February 03, 2017, from http://finance.yahoo.com/quote/TSLA?p=TSLA&d=t Introduction Founded in 2003, Tesla Motors is an American automobile manufacturer headquartered in Palo Alto, CA. Tesla boasts the development of leading vehicle models such as Tesla Roadster, Model X and Model S. The company deals in the design, development, manufacture and sale of both electric vehicle and electric power components of trains (forbes.com). Tesla was founded by a group of engineers with an aim of proving that electric-powered cars could outdo their gasoline-powered counterparts. As of May 2016, the company had a market capitalization of $33.5 Billion. Initial Public Offer Tesla Motors launched its initial public offer on the Nasdaq Stock Exchange on June 29, 2010. The company was able to raise $226.1 million in the IPO despite having a history for making losses since its inception in 2003. Prior to going public, the company had only reported a profit once in July 2009 (wired.com). The company went public in a bid to raise additional capital to cater for expansion. As per the prospectus, proceeds from the IPO were to be used to fund planned capital expenditures, working capital and other general uses. Specifically, the company was to use approximately $42 million to purchase the manufacturing facility for development of the Model S sedan in Fremont, California as well as a purchase of the power train manufacturing facility. For the year ended 31st December 2010, total capital expenditures were anticipated to be $100 $125 million. Tesla Motors is listed in the Nasdaq Securities Exchange; the company goes by the ticker name TSLA. Tesla's IPO was underwritten by four investment bankers; Morgan Stanley, Goldman Sachs, Deutche Bank Securities and JP Morgan. The underwriters were paid an underwriting discount of $1.105 per share totaling $14,696,500. Tesla offered 13,300,000 shares of common stock during its IPO at a price of $17.00 per share. Underwriters also reserved a total of 1.4 million shares to be retained by insiders. These shares were to be offered for sale to employees, business associates, directors, friends and family as well as customers who had purchased the Tesla Roadster and the same delivered to them by Tesla. The offer price per share was $17.00 with a total of $221.1 million being raised in the initial public offering. The offer price was priced above the $14-$16 per share planned range which was an aggressive move. The stock price has changed tremendously since the company went public. Currently, the share is trading at $251.16 as at February 3, 2016 (Yahoo-finance). This is a huge change given that the closing price on its first day on the trade floor was $23.89 per share. The share opened at $17.00 per share which leaves a total of $6.89 over the table. This shows how much investors were confident in taking a huge risk in a company that had been reporting losses since inception.As noted earlier, the proceeds were used to fund capital expansion projects, mostly the purchase of manufacturing facilities for the Model S sedan and the electric power train. Conclusion It is interesting to see how much the share price has grown over the years. From the initial price of $17.00 per share, the current share price is $251.16. An investor who purchased 1000 shares for a total of $17,000 can sell the same and make a total of $251,160. This would result in a profit of over $200,000 dollar. Not a bad sum after just 6 years of trading. References Andrejczak, M. (2010, June 29). Tesla Motors shares soar 41% in market debut. Retrieved February 03, 2017, from http://www.marketwatch.com/story/tesla-motors-ipo-opens-12above-offer-price-2010-06-29 Electric carmaker Tesla files for IPO. (n.d.). Retrieved February 03, 2017, from http://mobile.reuters.com/article/idUSTRE60S6MM20100130 Tesla Motors on the Forbes World's Most Innovative Companies List. (n.d.). Retrieved February 03, 2017, from http://www.forbes.com/companies/tesla-motors/ Tesla - Prospectus Filed Pursuant to Rule 424. (n.d.). Retrieved February 03, 2017, from http://ir.tesla.com/secfiling.cfm?filingid=1193125-10149105&cik=#D424B4_HTM_TOC51863_21 TSLA : Summary for Tesla, Inc. - Yahoo Finance. (n.d.). Retrieved February 03, 2017, from http://finance.yahoo.com/quote/TSLA?p=TSLA&d=t