Why is Tesla so insistent on hitting cash flow positivity without raising any additional capital?
They're sitting on a $50+ billion market cap, it shouldn't be that hard to raise. We're not even talking about increasing their debt load, since $1B of bonds are coming due. Why not just refinance them? Yes, they have a junk rating, but they've consistently borrowed at lower interest rates than comparable companies.
It seems driven by Elon Musk's hubris and insistence on proving shorts wrong rather than sound business strategy.
I think it’s also because Tesla needs the positive press that comes with reaching their goals. A lot of investors are investing because they want the company to succeed and Tesla needs their trust, especially after missing so many deadlines.
Tesla stock price is $304 in today trading. If tesla will raise cash with stock dilution, the stock can go to $270-280 range. It was there in Sep 2014, meaning TSLA investors got almost nothing for 3 years straight while broader market roared and a lot of stocks doubled or tripled. This, in turn, may force institutional investors start selling, and since TSLA is very concentrated and free float is very small, it may cause serious price decline.
And if you talk about cash raise with new bond offering, their 2025 bonds are trading with 7% yield. Not the most favorable terms, tbh.
I do realize that this article is from Bloomberg and the other one is from Wall Street Journal. But most of the discussion has already happened over there.
Even though Bloomberg has pronounced Tesla dead on more than one occasion, I’m still not convinced their recent troubles are big enough for the short sellers to make their money back.
If I'm understanding the articles correctly, Tesla is looking to recover funds from suppliers for failed deliverables/objectives. Why wouldn't they be trying to get compensated for that?
You're misunderstanding the articles. Tesla isn't looking to recover funds for failed deliverables, it's looking for a post-dated discount, retroactive to the original contract dates (as far back as 2016).
If Tesla had issues with suppliers previously, the proper venue would have been to withhold payments (interim payments or the final payment) pursuant to the terms of the supply contract, not send a memo asking for a refund after the fact.
They're sitting on a $50+ billion market cap, it shouldn't be that hard to raise. We're not even talking about increasing their debt load, since $1B of bonds are coming due. Why not just refinance them? Yes, they have a junk rating, but they've consistently borrowed at lower interest rates than comparable companies.
It seems driven by Elon Musk's hubris and insistence on proving shorts wrong rather than sound business strategy.