Tesla's IPO speeds past expectations
Investors interested in buying a chunk of the electric-car company push its stock up 41 percent, even as the broader stock market falls.
Tesla Motors shares zoomed upward to a closing price of $23.89 on Tuesday, handing the electric-car maker the second-best gain in an initial public offering this year.
Even as the broader stock market declined, with the Nasdaq falling by 3.85 percent, investors propelled Tesla shares to a 41 percent gain over its initial price of $17.
The Palo Alto, Calif.-based automaker has benefited not just from Wall Street enthusiasm for a plug-in car company, but also from a from U.S. taxpayers and favorable tax incentives from the federal and state governments.
Tesla's $109,000 electric Roadster, which can accelerate from zero to 60 in 3.9 seconds and claims a 236-mile range, has received favorable reviews. Tesla has begun taking orders for its $57,400 Model S five-person sedan, which it plans to start building in 2012.
But for investors, a bet on Tesla remains a risky one: the company has lost $236 million as of last fall, and has sold only about 1,000 Roadsters. It estimates that "we expect the rate at which we will incur losses to increase significantly" as development accelerates for the Model S and marketing and sales operations expand.
After ringing the opening bell on the Nasdaq, Tesla CEO Elon Musk told CNBC that Tesla has proven skeptics wrong before. He said the company is losing money because it has been ramping up its operations to make the Model S.
"People need to appreciate if we were just making the Roadster and [earning money from] our powertrain business, we'd be profitable as a company. But we're in massive expansion mode. With the Model S, we're increasing our volume 30- to 40-fold so it's impossible to be profitable for the company as a whole given that level of growth," he said.
Financial Engines can claim the best gain in an IPO for 2010 so far, posting a 44 percent increase in March.