Tesla Motors Files S1; Bankers Think It's Worth at least $1.5BN+

Electric car company Tesla Motors filed it’s initial S1 registration statement today which means that if everything goes smoothly with the SEC it is looking at a late Q2 IPO.   The headline of most stories about the filing is that Tesla plans to raise $100M, but my guess is they are shooting for much more than that.

A few interesting things that I noted while I browsing through the S1:

1. Tesla has sold a total of 937 Roadsters through December 31, 2009.  It sold 382 in the first half of 2009. Sales jumped dramatically in Q3 2009 to 324 but it looks like sales declined in Q4 to something less than 200 cars (tough to tell exactly).  As of 12/31/09 they had 220 “reservations” for the Roadster or roughly a quarters worth of backlog at the Q4 sales rate.  They will stop selling the Roadster model in 2011 no matter what because Lotus is shutting down their production line for re-tooling and Tesla's deal with Lotus ends in 2011 as well.
2. They have 2,000 “reservations”, each backed by a $5K deposit, for their “Model S” sedan, due to launch in 2012.
3. The last round of private financing, Series F, was done in August of 2009 at $2.97/share which equates to about $726M post when you factor in all common, preferred, options and warrants (245M shares).  The Series A was done at $0.49/share.

One thing that struck me is that based on the shares outstanding and the last round’s valuation, as well as the fact the bankers did not reverse split the shares pre-filing, my guess is that they are going to try and market this deal at a price equal to at least $7–$10/share (higher if they can get it).  That implies a post IPO valuation of $1.8BN to $2.5BN.  While they don’t include full year 2009 revenues in the filing, those were likely around $140M, depending on how much Daimler paid them in Q4.  That means that the bankers and investors are planning to take the deal to the market at a revenue multiple of 13–18X trailing 12 month revenues.   Of course Tesla probably has a huge 2010 forecast, which would take that multiple down substantially, but this deal is clearly being priced much more like a technology IPO than an automotive IPO and it will be interesting to see how the street reacts to that.

 

Please Note: This is not a recommendation to purchase Tesla stock (not that could if you wanted to because it isn’t even public yet).  Please see my disclaimer for more details.