Tesla shares rise further after big IPO pop
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Day Two of electric sports car maker Tesla Motors Inc.’s life as a public company, and investors have continued to bid the stock price higher.
The Palo Alto company’s shares, which were priced at $17 each in the initial public offering Monday, were up $1.56, or 6.5%, to $25.45 at about 11:40 a.m. PDT on Wednesday.
The stock had surged $6.89, or 40.5%, to $23.89 in its debut Tuesday.
Ben Holmes, who tracks IPOs at research firm Morningnotes.com in Boulder, Colo., said Tesla’s brokerage underwriters had such widespread demand for the stock in the IPO that they were able to ‘spread it with an atomizer’ -- meaning, many investors got the shares, but in very limited quantities.
An investor who asked for tens of thousands of shares might have gotten just a few hundred, Holmes said. A total of 13.3 million shares were sold by the company and its original shareholders.
Because of the broad distribution of the stock, any investor who wants to accumulate a significant number of shares now has to go into the open market and bid aggressively, Holmes said.
That won’t last forever; in fact, the stock already is off from its peak trade of $30.42 on Wednesday. And there’s plenty of ‘flipping’ going on: Total trading volume was 18.8 million shares on Tuesday and was on track for another huge day on Wednesday.
Still, despite the potentially long road Tesla faces before it can claim commercial success -- and turn a profit -- for the moment there’s a bragging-rights element to owning the stock, Holmes said.
The company’s IPO is the first by an American car maker since Ford Motor Co. went public in 1956. And Tesla has sparked investor interest not only as a play on revitalized U.S. manufacturing, but also as a company with Silicon Valley credibility.
‘It’s a total Fourth of July stock,’ Holmes said. He guesses that many investors who own the shares will be raving about it to friends and family at weekend barbecues and get-togethers.
-- Tom Petruno