Tesla Shares Take Breather But Future is Green

NEW YORK ( TheStreet) -- To say it's been a wild few months for Tesla Motors ( TSLA) would be an understatement: The blowout earnings; CEO Elon Musk's tweets; the drastic run up in shares. All of this and more has allowed Tesla to raise more than $1 billion in the marketplace, allowing one analyst to boost his price target despite have already raised it earlier this week.

Morgan Stanley analyst Adam Jonas raised his price target to $109 from $103 after Tesla raised $1.02 billion in debt and equity offering that was hyped more than than anything in recent memory.

Tesla fell 0.8% to $91.50.

Tesla priced the 3.39 million share equity offering at $92.24 a share, a penny below Thursday's close. Tesla originally announced it was selling 3.1 million shares as part of the capital raise, with Musk buying $45 million worth of the offering. Musk also bought $55 million from Tesla in a private placement.

The debt portion was raised twice, showing just how strong the demand is for all things Tesla, with the company eventually selling $600 million in convertible debt, up from an initial proposal of $450 million.

Jonas raised his price target to $103 earlier this week when he called Tesla America's fourth automaker, and now he's making it Morgan Stanley's top pick in U.S. autos.

"The auto industry may be in for a shock," Jonas wrote in a note. "While Tesla has a long way go, and tremendous risks remain, we may be witnessing an interplay of technology, industrial strategy and capital not unlike Cornelius Vanderbilt and the railroads, or Thomas Edison and electrical distribution." He wants to know whether traditional powerhouses such as General Motors ( GM), Ford ( F), Toyota ( TM) and others are going to be the dominant players in the electric car industry, or whether Musk's Tesla is the winner.

The fact he's asking this question (and he doesn't have an answer) is an testament to what Tesla has achieved in such a short time. The company is now profitable for the first time in its 10-year history, and this capital raise allows the Palo Alto, Calif.-based manufacturer to showcase the strength of its brand.

Not only is Tesla paying off its Department of Energy loan ($465 million), but it allows Tesla to continue to invest in its business and gives the company some financial breathing room. Jonas believes Tesla will end the second quarter with around $211 million in net cash, and $871 million in gross cash.

"Tesla's gross liquidity should now be equal to around 4 full years of capex," the analyst wrote.

Tesla is smart to take advantage of the incredible run-up in its stock. Musk may be even smarter (heck, the guy is in part responsible for SpaceX, Tesla, and PayPal) as he's buying here, not selling. One would expect that Musk would cash out some of his newfound fortune, but Musk is showing even more confidence, and that's resonating with shareholders.

With the enormous capital raise, it could allow for Tesla's momentum to strengthen, if that can be believed. The company could accelerate its Supercharger station rollout plan, and start production on the third-generation product, which would gain Tesla mass market appeal, even more than it already has.

"Looking further ahead, if Tesla's efforts to pioneer a national charging infrastructure are successful, the company should be in position to help set standards for battery and charging infrastructure commonality across the industry, with potential licensing revenue streams currently not in our model," Jonas wrote in his note. There's been a lot of speculation on the Supercharger network since Musk tweeted earlier this month that there's a way to charge the car faster than there is to fill a tank of gas.

Musk tweeted that a Supercharger announcement would come next week.

Tesla is maximizing its press beyond anything in recent memory, and Musk has dropped hints there is even more in store for the electric car company. It's been a wild ride for Tesla, and the only thing making noise is the crying from the shorts.

-- Written by Chris Ciaccia in San Francisco

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