Tesla Seeks To Raise More Cash

[Drew Dowdell]

Tesla is seeking to raise nearly $2.7 billion to add to its sagging balance sheet according to a filling.  It would offer 3.5 million shares priced at $243 per share and a $1.6 billion convertible debt. Elon Musk will be buying $25 million in shares and currently owns around a 20 percent stake in the company.

Wall Street seemed to find this capital raise promising as it boosted shares 1.5% before the opening bell.  Analysts were calculating that Tesla, which burned $1.5 billion in Q1-2019 alone, would not have enough cash to continue working on its Model Y crossover and the new Tesla Semi-truck, and also getting production rolling in China. 

In the backdrop of a sagging US auto market, Tesla has seen demand for its cars soften dramatically in the US over the past two quarters, though demand for EVs in Europe has increased.

 

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[smk4565]

Elon should just buy all 3.5 million shares.    More importantly this company needs to sell cars at a profit.

[Drew Dowdell]

$25M did seem like a pittance in the grand scheme of things.   But I wonder if he's relatively cash poor out of his billions in assets.

He'd probably have to sell off stakes in other entities to buy all of the Tesla shares. 

[G. David Felt]

Not being a financial wizard at long term planning of a major company. At the rate of sales to costs to R&D, I wonder what the analytics would say is the year of profitability now? ?

2020, 2025, 2030, 2035?????????

I bet Rivian has a better idea than Tesla, but I do wonder how long before someone buys them up.

[Drew Dowdell]

15 minutes ago, dfelt said:

Not being a financial wizard at long term planning of a major company. At the rate of sales to costs to R&D, I wonder what the analytics would say is the year of profitability now? ?

2020, 2025, 2030, 2035?????????

I bet Rivian has a better idea than Tesla, but I do wonder how long before someone buys them up.

I think Tesla made 2 big mistakes.

1. getting way overly complicated on the Model X with the doors -  It would have sold just as well without them, possibly at a lower price (higher volume), and it wouldn't have been delayed a year.

2. Doing the Model 3 before the Model Y - That was just a very poor reading of the direction of the product mix out there as far as sedans go.  Still build a sedan of course, but the Model Y should have been the priority. 

 

I do wish Rivian well, but I wonder if they'll be priced too high to make a big impact on the market.  If they price their SUV at the same price as the Model X, they'll probably kill Tesla in sales, but I get the impression that they'll be higher priced than that. 

[riviera74]

WOW. Poor cash management indeed.

So Tesla needs $2.7 Billion for its cash flow issues.  Elon Musk needs a much better CFO STAT.

As for product, Tesla needs to build more crossovers please.