Tesla`s Convertible Bonds
| Case Code: FINC179 Case Length: 10 Pages Period: - Pub Date: 2021 Teaching Note: Available |
Price: Rs.300 Organization: Tesla, Inc. Industry: Automotive Countries: United States Themes: Convertible Bonds, Debt Instruments |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
On March 1, 2021, the stock price of Tesla, Inc. (Tesla), known for its electric cars, closed at US$718.43. The same day, Tesla’s convertible bondholders converted the bonds issued to them in March 2014 and earned almost 900% returns. Tesla had generated and collected more than US$7.69 billion between May 2013 and May 2019 through convertible bonds. However, analysts believed the incredible growth in Tesla’s stock price would end the era of convertible bonds at the company. They opined that if Tesla was able to improve its credit rating and profitability, it could adopt a less complicated method of financing to raise funds..
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