Back to top

Analyst Blog

Zacks Equity Research

Tesla Unlikely to Raise Capital in 2016 for Proposed Merger

TSLA GT TWTR

Trades from $3

Tesla Motors, Inc.’s (TSLA - Free Report) CEO Elon Musk stated via Twitter (TWTR - Free Report) that the automaker would not need to raise capital in the form of equity or debt in the final quarter of 2016 in relation to its proposed merger with SolarCity Corporation . When asked if the company intends to raise capital in first-quarter 2017, he replied that it would probably not need to do so even then.

Tesla also filed a report stating that the company “may” raise capital, contrary to its August statement of “planning” to do the same. The company expects its present liquidity sources, including cash and expected cash flows to provide enough liquidity for its current plans.

SolarCity too does not intend to raise capital this year. This comes after Goldman Sachs downgraded Tesla’s stocks to “Neutral” from “Buy” over concerns regarding the proposed acquisition of SolarCity, including capital requirements by both companies which have a high cash burn rate. Musk also announced the launch of a new product by Tesla on Oct 17.

Shares of Tesla fell around 0.4% to close at $200.10 on Oct 11.

Zacks Rank

Tesla currently holds a Zacks Rank #4 (Sell).

A better-ranked company in the auto space is The Goodyear Tire & Rubber Company (GT - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Goodyear Tire has seen its earnings estimates move north over the last 60 days. Also, the company has posted positive earnings surprises over the last four quarters, with an average of 10.28%.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>