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Tesla shares soar on first trading day

Associated Press / June 30, 2010

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NEW YORK — Shares of Tesla Motors Inc. gained more than 40 percent in their public trading debut yesterday 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 percent 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 US stocks tumbled.

The Palo Alto, Calif.-based company is the first US automaker to go public since Ford Motor Co. 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 Inc., a portfolio manager that saw shares gain nearly 44 percent in March.

The IPO comes at a time when volatile broader markets have dampened investors’ taste for risk.

The company hasn’t had a profitable quarter since it was founded in 2003. It has sold only 1,000 of its high-end Roadster sports cars.

Investors are hoping that a planned lower-priced car will have a broader appeal. Tesla expects that a $50,000 four-door electric sedan, the Model S, which isn’t slated to go on sale until 2012, will attract more buyers. Its goal is to build 20,000 of them a year.