Boston, MA 03/12/2014 (wallstreetpr) – Tesla Motors Inc (NASDAQ:TSLA) shares have been declining on the stock screeners since the end of February. The trend continued for a few more days as more and more analysts began to share the same came out with firm expectations that Apple Inc (NASDAQ:AAPL) might have a buyout plan for the EV maker. Larger financial stake in the hands of private investors is a great risk for innovative companies especially if they lack intellectual property or patented technology and tesla has not announced any patents, yet!
Why Apple –Tesla Rumor Got the Buzz in the First Place?
Acquisitions are a more than likely event at Apple Inc (NASDAQ:AAPL) in the coming year. The iPhone maker has a massive cash hoard of $159 billion, which fact puts an ugly question mark on its ability to create value for its investors. However, in the recent earnings call Tim Cook refused to expand share buyback plans or dividend payment to shareholders, saying he “might need” the cash to buy some interesting ventures. He also reaffirming investors he will bring in more innovation to the stagnating portfolio of the iPhone maker.
Giga Factory’s value proposition for Apple
The Giga factory investment will relieve Tom Cooks from two biggest headaches he has been facing since past two years. First, it will sooth Institutional investors who are more than ever hungry for greater returns. Secondly, it will reassure small value investors who put their money on the company’s ability to deliver innovations and pivot profitably before market collapses.
Musk’s GigaFactory will be a gigantic production facility for rechargeable Lithium-Ion batteries that Tesla Motors Inc (NASDAQ:TSLA) currently bys elsewhere. This back ward integration will help the EV maker bring its costs down while keeping the quality up at a high standard. However, the production facility needs huge chunks of liquidity in development phase which Tesla is basically short off. It starting budget line is rather constrained; merely a $2 billon of own investment is committed from in-house. It plans to gather private funding from enlisted cash rich partner companies. So far, Panasonic Corporation (ADR) (OTCMKTS:PCRFY) has agreed for a $1 billion investment. However, Apple Inc (NASDAQ:AAPL) can bring in much more than that!
