Cramer: Tesla Could Raise $3 Billion in 'Well-Timed' Stock Offering
Jim Cramer is all for Tesla Motors' (TSLA) - Get Report plans for a $2 billion stock offering that will help boost production of the popular Model 3.
"I am really in favor of them doing this because the line for the Model 3 is too big and they've got to raise the money," Cramer told TheStreet on Thursday.
"Here's the problem with Tesla -- it's a high-quality problem -- they have demand for hundreds of thousands more cars than they can make. Who else can say that? That's an incredible statement," Cramer added. "And so they need to raise the $2 billion -- they'll probably raise $2.5 billion, they could get $3 billion really because Musk is perceived as someone who makes a car that everybody wants."
Wall Street has been aflutter over the offering, particularly because it was announced on the same day that Goldman Sachs upgraded the stock to buy from neutral.
Goldman Sachs happens to be one of the two main banks, along with Morgan Stanley,advising Tesla on the secondary offering.
"A lot of people say it was a well-timed Goldman upgrade. I would tell you this -- I think that maybe it was a well-timed offering in sync with the Goldman upgrade," Cramer said. "I can't bet against Telsa. People like the car too much."
Goldman's upgrade is based on the assumption that "following a 23% decline in the share price post the Model 3 unveil, we do not believe Tesla shares are fully capturing the company's disruptive potential," analyst Patrick Archambault wrote in a note to clients.
"This combined with a more stable macro backdrop (relative to January/February) and increased confidence in Model 3 demand (from orders and our competitive benchmarking) drives attractive risk/reward," he wrote. "The company has publicly stated it might look to raise capital, and our detailed capex analysis points to capital needs of $1 billion."
The analyst said that the stock has a 22% potential upside to his price target of $250.
Shares of Tesla were falling 0.95% on Thursday to $209.16.
