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    • I read a report from a hedge fund manager yesterday about Tesla's disastrous financial situation. He predicts a collapse within months. There are predictions that they could lose almost a billion dollars this quarter. They've had production problems getting new cars off the line. And other car manufacturers are coming out with a steady stream of good electric cars.

      Forbes just wrote that the financial noose is tightening around Elon's neck and they are in severe economic distress, but he could sell $2 billion worth of stock. It will drive his stock down further and he needs to make it happen fast.

      Some entrepreneurs here in Silicon Valley say he's a survivor like Jeff Bezos was when everyone thought Amazon is going down. It's a buying opportunity. Your thoughts.

    • The stock is being further marred by this fatal crash that happened yesterday near us. My wife drove past it on the freeway. We don't seem to know the cause of the crash yet.

    • I haven't read the article yet so i'll ask, how much do they need to stay operational for the next 18 - 24 months? I would agree he appears to be a survivor and will find a way to get it done... but that's if the cash he needs is reasonable.

      Maybe Softbank comes in and buys a big position at a decent discount with aggresive warrants etc.

      The common story is always about their car production volume (reasonably so) as the proxy for how they are compared to other car manufacturers but what about the solar / batter business? What is the upside there where perhaps they're actually going to be 10x Ford one day.

      EDIT: I went to check their stock price right after posting and this is the headline I see on Yahoo Finance... "SoftBank goes solar"

    • According to Forbes he needs $2 billion to last him into 2019. He could raise that and only dilute the company by 5%, but the comparison with companies like Ford are pretty shocking. Here's a quote from the hedge fund guy:

      "As a reality check, Tesla is worth twice as much as Ford [estimate of the enterprise value of both companies], yet Ford F, -0.05%  made 6 million cars last year at a $7.6 billion profit while Tesla made 100,000 cars at a $2 billion loss,” Thompson said. “Further, Ford has $12 billion in cash held for ‘a rainy day’ while Tesla will likely run out of money in the next 3 months. I’ve never seen anything so absurd in my career."

    • I don't think Tesla will collapse soon. They're in a risky position, but I don't think it's dire.

      John Thompson, the hedge fund manager referenced in the article you linked to, holds a large short position in Tesla and has for years. I'm sure he believes Tesla will fail or he wouldn't have bet his fund's money against it so many years ago, but it's important to remember that he literally has a vested interest in convincing people Tesla will fail. Take what he says with large grains of salt.

      I'm not a finance expert, but my understanding of Tesla's current situation is this:

      - Over the years, Tesla has taken on a lot of debt. But not because they were in financial trouble. They took on debt in order to build out their factories and manufacturing capabilities without depleting their cash reserves. Instead of having debt and no cash, they now have debt, cash, and significant assets that they bought with that debt.

      - Tesla actually has a lot of cash coming in from sales. Not enough to cover their expenses, but the deficit is mostly due to their capital expenditures. If they were to stop building gigafactories and service centers and superchargers and tighten the belt a little, they could probably turn a profit even without a big increase in sales.

      - The Model 3 production ramp has been slower than expected, but it's finally starting to happen. And the number of people who've put down a $1,000 deposit on a Model 3 is over half a million and still growing. That's a lot of people who want to buy new Teslas (full disclosure: I'm one of them).

      - Tesla has an incredibly loyal customer base. Tesla owners love their cars and many buy several of them.

      - It looks like Tesla is about to successfully break into the trucking industry, which could be huge for them. Dozens of companies have already preordered hundreds of Tesla Semis.

      - Cars aren't Tesla's only revenue stream. They've also had success recently with infrastructure projects like their giant powerpack that helps reduce power costs in South Australia. This seems to be another promising new market for them.

      That said, Tesla does like to take big risks, and they're operating pretty close to the danger zone. If most things go well, they'll be fine, but if a few things go horribly wrong, they could be in a bad place.

      Even if the worst happens, though, Tesla's products, customers, employees, and infrastructure are so valuable that I doubt they'd have much trouble finding emergency capital or, in the worst case, a buyer.

      Elon Musk is bold, but he's not dumb. So far, betting against him has been a bad idea. Someday it might pay off, but I don't think we're there yet.

    • My question is so what if it loses a billion (or more) dollars in valuation? Clearly Tesla's stock value is based on it's future production and not current sales or production. Yes they have had long lasting and serious production issues but their future production still looks to be greater than any other company. Eventually he'll get production at the battery factory going and they'll rule the world for a time. Yeah it'll get worse before it gets better but it'll happen. The question is will stock holders want Elon out as CEO? He may be a visionary and had a lot of success with space X but he sure hasn't made much headway in the production challenges at Tesla.

    • I really hope Tesla survives. Independent automakers everywhere, and in particular in the USA, have pretty much always failed. Here is a list of hundreds of failures:

      Going up against the big corporate automakers and their government bail-outs, tax breaks, collusion with big oil, etc. etc. is not for the faint of heart! If I could afford a Tesla I would buy one today; though it is a very nice car I'd buy it just to "stick it to" the big three.

      C'mon Tesla, you can do this!

    • The New York Times just weighed in with its own doubts. I didn't see anything new in their story, but of course they have a big voice.

      This story from Bloomberg, Tesla's Push to Prove the Haters Wrong Only Proves Them Right, does touch a nerve with me. I know a few people who work at Tesla who say Elon is continually out of touch and unrealistic about manufacturing, off by an order of magnitude on what they can produce by when. Some of their senior manufacturing people left last year because they say he's too interested in becoming a Twitter star and spaceman to focus on manufacturing.

    • Sounds like maybe a bit of a reality check via a market cap adjustment + dilution on expensive new money to stay afloat for 12 - 24 months to hit production targets + focus from Elon might help?

      The product is so beautiful (when not being recalled) and loved by customers, I can't imagine a world where the market allows the business to go to $0 and doesn't stay operational. The next round of money just might be very expensive with a lot of downside protection*.

      *I"m not a finance guy.

      Does an investment in Tesla make sense for Softbank? Maybe they put in $5B at a $35B valuation which is a 20% discount on their current market cap and then own 12.5% of the future.

    • Hmmm, it seems Elon's April Fool's joke backfired on him. Perhaps he foresaw this and has somehow made a boatload of cash on it. Your thoughts?

    • It's really hard to know what he's thinking. I have tremendous admiration for people like him and Jeff Bezos, who took all kinds of risks to build companies no one thought possible.

      On the other hand, Steve Jobs told us that a critical lesson he learned is never put something not core to your mission in the critical path of your success. He did that with the magneto-optical disk in NeXT machines and always regretted it.

      Not many people noticed that a Maryland judge allowed a lawsuit to proceed from shareholders feeling wronged by the Solar City acquisition. From MarketWatch:

      The SolarCity acquisition put more than $3 billion in additional debt into Tesla’s already-clogged accounts, saddled Tesla with a business that is far from a sure thing and has little to do with its core automotive business, and added yet another complicated manufacturing launch to Tesla’s to-do list with the so-called “Gigafactory 2” near Buffalo, New York. For the pleasure of adding all of that, Tesla paid out about $2.6 billion in stock (at the time), diluting Tesla shareholders, and now may be forced to pay more to its own investors.


    • I agree that the SolarCity acquisition was a huge misstep. I didn't understand it at the time and still don't.

      I know Elon wants Tesla to be more than just a car company, and I know he didn't want to let SolarCity fail, but it sure would suck if SolarCity brought Tesla down too.

    • One thing about him, when he has a gun to his head, he's incredibly determined. He's sleeping at the factory again, willing to do any job to help.