NEW YORK (Reuters) - If Tesla Inc (TSLA.O) Chief Executive Elon Musk needs to raise even more money, there may be a way.
On Tuesday billionaire investor George Soros disclosed a $35 million stake in Tesla convertible senior notes during the first three months of the year.
Convertible notes give investors the right to trade their debt for equity at a conversion rate and are more appealing to the risk-averse, allowing them to benefit from Tesla’s stock price rising while guarding against the risk that it might not.
Tesla’s stock price hit a high of $386 last year but has since slipped to close at $286.48 on Wednesday.
While Musk has said the electric car maker would not have to raise more cash this year, Wall Street disagrees, with analysts saying the company would need to borrow if it continues to fail to meet its own production targets for building new, lower-cost Model 3 electric sedans.
Investors who evaluated Tesla’s junk-bond offering last year now say a convertible offering appears a more likely option than returning to the high-yield market.
“It’s a wonderful trade,” said Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management, who earlier this year bought Tesla convertible bonds due in 2022 and said he is interested in buying more notes.
Tesla investors fretted in late March about the company’s ability to produce the Model 3. A crash involving Tesla’s autopilot technology and its falling bond price also took a toll.
“The company is burning cash at such a rate that a capital raise is nearly inevitable at