Soros Finds Another Route to Profit From Tesla's Volatile Stock
(Bloomberg) -- Bolstered by earnings optimism, battered by missed deadlines, Tesla Inc. shares have bounced around in a price range exceeding $100 already in 2018. To George Soros, it’s a recipe for making money.
Not in the stock, per se, but via convertible bond trades. The hedge fund manager disclosed a $35 million stake in the hybrid securities this week, a position that a person with knowledge of the matter said is part of an arbitrage play designed to harvest volatility.
A spokesman for Soros Fund Management LLC declined to comment.
Earlier this week, Goldman Sachs Group Inc. analyst David Tamberrino warned that Chief Executive Officer Elon Musk may need to tap capital markets for more than $10 billion by 2020 to fund the company’s existing operations, plans for additional vehicles and expected expansion into China. Musk said this month that another capital raise won’t be necessary this year and that he specifically doesn’t want to do one.
“We see several options available to the company to refinance maturing debt and raise incremental funds, which should allow Tesla to fund its growth targets,” Tamberrino wrote in a note to clients. “However, issuing incremental debt (including priming current creditors with secured debt) may weigh on the credit profile of the company while issuing additional equity or convertibles at lower premiums would dilute current shareholders.”
Tesla shares fell as much as 3.7 percent Friday in New York and are down more than 11 percent this year, giving the Palo Alto, California-based company a market value of about $47 billion.
©2018 Bloomberg L.P.