Sort of, but not really...the FASB has said you can treat the underlying shares as non-dilutive if the stock price isn't above the conversion price (this is called "net share settlement"). So basically, while outstanding, the debt acts like debt for accounting purposes until the stock price is above the conversion price. When it goes above the conversion price, the you treat those incremental shares as dilutive. Additionally TSLA is putting what's called a bond hedge (or call spread) on top of this, which limits dilution over and above an even higher stock price.

Pretty sweet deal if your stock price doesn't go up and you only have to pay minimal interest.

Here's an example that lays out a similar structure and accounting treatment: https://www.sec.gov/Archives/edgar/data/1084961/000119312513...

>Pretty sweet deal if your stock price doesn't go up and you only have to pay minimal interest.

So Tesla is shorting TSLA?

Lol, effectively. A convert is basically a forward stock sale, so if you're TSLA you're basically saying "I get a pretty good cost of capital if my stock stays where it is, but if it goes up a lot, my company is probably in better shape than it was before I raised capital, so I'm more or less happy either way."

looks like you've done time on a coverts desk ;)

In another life... :)

But you're not flooding the market with $750M new common stock of TSLA in the market. If TSLA price crashes it could impact consumer confidence in buying the T3 which Tesla is banking on.

If TSLA drops and T3 are delayed, many consumers might panic and not oder their car creating a vicious circle.

... They are also issuing new shares:

> Concurrently with this offering of notes, we are offering 968,993 shares of our common stock (or up to 1,114,341 shares of our common stock if the underwriters of that offering exercise their option to purchase additional shares in full), in an underwritten offering pursuant to a separate prospectus supplement. The closing of this offering of notes is not contingent upon the closing of the concurrent offering of common stock, and the closing of the concurrent offering of common stock is not contingent upon the closing of this offering.