Tesla's converts turn into shares (2018–2021)
Tesla issued convertible notes when cash was tight. As its share price soared, several tranches converted into stock at maturity rather than requiring repayment, sparing the company billions in cash outflows.
Tesla avoided large cash repayments, easing pressure during its production ramp.
It demonstrated how a rising stock lets convertible debt quietly become equity, a best case for issuers of such notes.
It explains the mechanism behind GameStop's deal. Convertible notes are debt that can turn into stock, and GameStop is choosing to make that conversion happen early.
