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Tesla Roars Out of the Garage

June 29, 2010
2 min to read


Electric-car maker Tesla Motors Inc. generated the second-best initial public offering gain of the year Tuesday, even as the broader market fell sharply, The Wall Street Journal.


Tesla's ability to rise 41 percent against a backdrop of plummeting stock indexes wasn't the only sign of high demand for the initial public offering. It also bucked a trend of new companies cutting the prices of their IPOs in the past several months amid stock-market volatility, and was able to sell its shares at a level above its expected range. Some IPO hopefuls haven't been able to complete their deals and have shelved them for the time being.

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Tesla's IPO was expected to appeal to both clean-energy investors and car geeks, but its strong first-day showing isn't an indication that all new stocks will be embraced as warmly. Earlier this month, another highly anticipated IPO from options exchange CBOE Holdings Inc. priced well and gained 12 percent on its debut, but the group of new issues that followed in its wake had mixed results in pricing and trading.


Tesla closed at $23.89 on the Nasdaq, up $6.89 from its IPO price of $17. Its 41 percent gain was the second-best debut from an IPO in the U.S. this year, behind the nearly 44 percent pop that Financial Engines Inc. experienced in March.


Tesla sold 13.3 million shares at a price above its expected range of $14 to $16. The size of the deal was also boosted Monday, with Tesla selling 11.1 million shares and current owners offering the rest. Among the sellers were Chief Executive Elon Musk, whose stake will fall from 36 percent to as little as 28 percent after the IPO.


The company, named for scientist and inventor Nikola Tesla, has been selling its all-electric Roadsters for nearly two years and is still the only company selling highway-capable electric vehicles to consumers in volume.

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