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Investors snap up Tesla's shares in its trading debut

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Investors snap up Tesla's shares in its trading debut

Electric car maker tops expectations



NEW YORK -- Shares of Tesla gained more than 40% in their public trading debut Tuesday after the electric car manufacturer raised more money than expected in its initial stock offering.

Investors snapped up Tesla's shares even as the broader markets took a beating. The stock soared $6.89, or 40.5% from its offering price, to close at $23.89 -- marking the second-biggest first-day gain among initial public offerings this year. Tesla's performance was a feat in a sour market that has forced many companies looking to raise funds through IPOs to accept lower prices to get deals done.

The IPO also came on a day when most U.S. stocks tumbled as signs of slowing economies from China to the U.S. spooked traders already uneasy about a global recovery. Broad indexes closed down about 3% with the Dow Jones Industrial Average dropping below 10,000 for the first time since June 10.

The electric car maker, based in Palo Alto, Calif., is the first U.S. automaker to go public since Ford held its initial public offering in 1956. The offering raised $226.1 million after selling 13.3 million shares priced at $17 apiece. Tesla had earlier expected to price just 11.1 million shares at $14 to $16 per share.

Tesla's first-day stock gain was outpaced only by Financial Engines, a portfolio manager that saw shares gain nearly 44% in their first day of trading in March.

Scott Sweet, owner of IPO research firm IPO Boutique, said Tesla was "brilliantly marketed" to investors as a next-generation automaker. Shares opened at $19, but drifted down, hitting a low of $17.55. As the day progressed, the shares regained some ground and took off once they hit $19 again, as investors lost reservations over how the stock would fare.

"Once it penetrated the $19 opening, that was almost like a buy signal," Sweet said. But he cautioned that the company has risks, including the fact it has yet to show a profit.



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high upside. tesla will get bought. i would think its high risk myself. don't forget, this is california. some think its prob the same thing as computers and software. but its not.

i would call this 'toy stock'.

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As much as I admire Tesla for showing the world that electric propulsion is viable (it got Bob Lutz to start the Volt project), they have nothing that GM or any other major auto manufacturer doesn't have in terms of technology. No advancements, no super trick capacitors, no special battery chemistry... just the balls to create a business model based on stuffing Lotuses with 6,831 laptop battery cells and a powerful electric motor.

It's a start-up company based on vision and capital, not technological or engineering breakthroughs.

Edited by pow

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tesla is a vehicle to speed up the introduction of the market to electrics, something they can do better than the big car companies who are too big to take on innovation like this without an assload of red tape and wasting resources.

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