Chris Lau
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Chris Lau in Value Stocks,

Massive Dilution Awaits Tesla Shareholders

When Tesla (TSLA) closes the acquisition of SolarCity (SCTY), look out below. Tesla also needs more cash, via share sales. The share count dilution schedule is as follows:

1. Dilution on closing of SolarCity Merger

2. Dilution from capital raise: Q1 or Q2 2017

3. Dilution from convertibles. Pay using stock or cash. 

4. Executive share compensation

Notice the 40 percent share count increase between June 30, 2015 (127.1M) and June 30 2016 (~ 150M). That is a nearly 20 percent increase in shares from last fiscal alone.

The next line of batteries will have a better capacity, but capex spend and opex costs will just grow faster than revenue.

Buyer beware.