Scottish investment manager Baillie Gifford & Co. is ready to raise its stakes in Tesla Inc TSLA following an impressive third-quarter report and in spite of proliferating legal liabilities.
What Happened
The automaker’s third-largest shareholder said Monday it would be willing to increase its 7.72-percent ownership to advance CEO Elon Musk’s long-term mission.
"If he needs more capital, we would be willing to back him," Baillie Gifford partner Nick Thomas told The Times of London.
Why It’s Important
The confirmed availability of capital is reassuring to investors concerned about a potential capital raise, which Musk affirms is unnecessary and experts assure is imminent.
Baillie Gifford’s backing of management is similarly critical. Thomas called Musk an entrepreneur of “vision and ambition, who’s working towards a social good.” The praise is particularly meaningful as the Street reevaluates Musk’s leadership abilities. The CEO is being sued by a British cave diver for libel, recently paid a $20 million settlement with the Securities and Exchange Commission for a stock-pumping tweet, and has incurred an FBI investigation for misstating production numbers.
Baillie Gifford’s appreciation for Musk compounds its confidence in Tesla, which it claims “will be worth considerably more” than its $56.5 billion value.
What’s Next
The investor did not confirm an imminent strategy to invest more in the electric vehicle manufacturer. Nonetheless, Tesla trade up 3 percent on the news to around $340.50 at time of publication.
Related Links:
Tesla Surges Following Big Q3 Earnings Beat, First Profitable Quarter In 2 Years
Why Consumer Reports No Longer Recommends These Tesla, Honda Models
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