The "Is Tesla Going Bankrupt?" thread

[Swissmoneychf]

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Hey all,

(again excuse my english, doing my best to be understandable)

so, I'm about to sign next week to get my Model S soon and my associate keeps saying that it's a really bad idea, that I should wait because Tesla is not far from Bankrupt... He doesn't know anything about Tesla, Musk etc. but he's into the "stock options" thing. Buying selling etc and he says that the banks ain't happy with Tesla and he won't buy one before waiting 2-3 years.

Personally, I can't even imagine that, regarding to all the money they're spending to grow but well, I don't know. I've read and seen a lot about Musk and Tesla and the start wasn't very good for them. Don't know what to think.

Let's say Tesla goes Bankrupt, what will happen to people who bought their cars ? Where are we gonna repair and make the services ? What about the Superchargers ?

I'm pretty sure that many of you will laugh reading this, but by keeping telling me that he starts to scare me just before my contract beeing signed.

Give me please some arguments to tell him that he's totally (or partially) wrong.

Thank's guys !

 

[MikeKFE]

I'm a Tesla owner and investor. I don't think they're going bankrupt.

The good news is that if they do go bankrupt the company won't simply evaporate. They've built too much of a brand. Someone will acquire them. That means that service, support, development etc will likely continue on even if Musk goes bust.

The risk here is really really low. The American ICE manufacturers were MUCH closer to going bankrupt in 2008/2009 than Tesla is today and people still bought their cars.

 

[mikes_fsd]

Tesla has been "going bankrupt" for more then 10 years... that didn't stop over 500,000 from ordering from them (including the Model 3 reservations)!

 

[Dangerous Fish]

Tell him I told you to tell him to mind his own business.

 

[Swissmoneychf]

I'm a Tesla owner and investor. I don't think they're going bankrupt.

The good news is that if they do go bankrupt the company won't simply evaporate. They've built too much of a brand. Someone will acquire them. That means that service, support, development etc will likely continue on even if Musk goes bust.

The risk here is really really low. The American ICE manufacturers were MUCH closer to going bankrupt in 2008/2009 than Tesla is today and people still bought their cars.

That's the type of answers I'm looking for, thanks

 

[ABCCBA]

@Swissmoneychf There is a difference between filing for bankruptcy and going out of business. Tesla Motors will never go out of business in our lifetimes. However, their debt will be so staggering after the Model 3 goes into production that it is possible that they will need to restructure their debt through a bankruptcy filing.

Operationally, nothing will change. Cars will be sold, Owners will still get serviced, superchargers will still work, etc. Stockholders and debtholders will get screwed.

There are many examples of this: General Motors, Delta Airlines, etc. All are much better off once they shed the existing shareholders and debt.

Hey all,

(again excuse my english, doing my best to be understandable)

so, I'm about to sign next week to get my Model S soon and my associate keeps saying that it's a really bad idea, that I should wait because Tesla is not far from Bankrupt... He doesn't know anything about Tesla, Musk etc. but he's into the "stock options" thing. Buying selling etc and he says that the banks ain't happy with Tesla and he won't buy one before waiting 2-3 years.

Personally, I can't even imagine that, regarding to all the money they're spending to grow but well, I don't know. I've read and seen a lot about Musk and Tesla and the start wasn't very good for them. Don't know what to think.

Let's say Tesla goes Bankrupt, what will happen to people who bought their cars ? Where are we gonna repair and make the services ? What about the Superchargers ?

I'm pretty sure that many of you will laugh reading this, but by keeping telling me that he starts to scare me just before my contract beeing signed.

Give me please some arguments to tell him that he's totally (or partially) wrong.

Thank's guys !

 

[stevem]

I'm not an investment banker or great at reading financial reports.

When people say "Look how much money they are losing. They lose $20K on every car", I usually counter with "but look how much money they are investing". Which usually from the negative crowd "You just don't understand finance, it doesn't work like that".

But what makes sense to me (and I'm not a mind reader or know the inner workings of Tesla) is "Elon and his team look at all the financials of the company (probably daily). They see what they have coming in and have long range forecasts. His goal is not to make cars for 2 or 3 years and then close the company. So they see all this and they are investing hard. We may think we know the finances, and we read the financial reports or hear about banks and think we know what's going to happen to the company. But we don't know as much as Elon. And all I know is that I would NOT bet against Elon Musk."

 

[Gentilly7]

Your associate is a stock guy so none of this makes since to him, from a stock perspective. Let's say worst case scenario Tesla files for bankruptcy because they no longer have enough cash to stay afloat. Highly unlikely but hey, it is possible. Well given the amount of enthusiasm and loyal cult following around Tesla, any and every investor would be lining up to acquire or pitch some sort of financial backing deal. Buffet would be first in line. Apple may not have interest in buying Tesla now but a financially weak Tesla with all of the technology included would be too tempting to resist. Apple has way more money than they have innovation these days lol. So Tesla will never go away, even if they did run out of money.

Sure they are not really turning a profit yet but that is usually the case with highly innovative start ups. They are paying the cost to be Boss now. The key is that they are not just producing the same kind of cars you can get from the more profitable auto makers. Their products are truly in a league of their own right now.

 

[Krugerrand]

That's the type of answers I'm looking for, thanks

Why? Because it supports your current position of wanting a Model S and the proximity to you following through on that want?

Facts:

People (all sorts) who have various levels of Tesla knowledge/intel have been predicting bankruptcy for years. To date they've all been wrong.
Tesla has been on the brink of bankruptcy twice that the public knows about (end 2008, beginning 2013). That information wasn't known by the public until after the fact, when Tesla was more financially stable.
Car manufacturing is capital intensive and no new car manufacturer has succeeded for several decades.
Tesla is positioning itself to become a $1 trillion valued company - can we say extraordinarily capital intensive?
Elon Musk is intelligent, pragmatic, ballsy, hubristic at times, determined, and has surrounded himself with like-minded individuals who have a clear focus for the future of mankind on this planet.
The car, what it represents, and how it transforms the driving experience, is on a whole other level of phenomenal. That's got to be worth the risk right there, no?
People who know nothing about something but talk as though they have a clue, at best, makes themselves look incredibly foolish.
Many of us weren't happy with the banks in 2008, and still aren't happy with the banks today. They make mistakes too (sometimes on purpose) and aren't some untouchable entity.
Your associate is missing out on an incredible experience and poisoning the air you breathe. Be sure to rub that in his face. Every. Single. Day.

 

[Austin Powers]

No. Tesla, is 'too big to fail' by now

 

[Swissmoneychf]

Why? Because it supports your current position of wanting a Model S and the proximity to you following through on that want?

Ehm, no. Because it's argued

Worth the risk, I guess. In my case it's a 120k car, would be stupid to pay that money for something that you don't even know if the service centers will still be open in 2 years, but now with the explanations I feel much more comfortable with the idea of owning a Tesla. He knows better than me, that's why I was looking for some real explanations from people who are into these things so next time I can explain him too.

Thank's.

(sorry for not answering every post individually, thank you guys for your helpful comments)

 

[mikeash]

Companies in trouble don't typically have a product reservation backlog that's 3x larger than the total the company has delivered over its entire ten year life.

 

[reuted]

In response to the 400k orders Tesla is seeking to accelerate growth to be able to satisfy the unexpected high level of orders. Tesla does this by spending / investing faster. What Tesla is doing right now is really hard to scale up at their speed. Yes it is likely to create a cash crunch. By the same token it will be really hard to replicate. Note Tesla is able to sell cars at more then double the margin of just about everybody else.

Last not least: Our swiss relatives are not a big fan of us driving an elon mobile. Mostly they argue that the power generation creates more pollution than an efficient ICE.

Just go for it. The car is just great great fun to drive. I used to bike through the alps. Follow the lead of solarimpulse and feel good about it, enjoy the superb handling with no noise in spite of a few people who may take some time to "approve"?

 

[Swissmoneychf]

Companies in trouble don't typically have a product reservation backlog that's 3x larger than the total the company has delivered over its entire ten year life.

Indeed, but what will happen if they delay the delivery ? And regarding to the comments I've seen, it's gonna happen. That's one of the points we were discussing with my associate. He says that if the deliver is delayed again (many customer were unhappy with the Roadster already), the stocks are going to loose value etc. But well, wait and see.

 

[gene]

Swissmoneychf, you and your associate might watch this video just released yesterday. It will give you both confidence.

 

[supratachophobia]

That's the type of answers I'm looking for, thanks

Another investor / multiple Tesla owner. I do not believe they are going bankrupt, especially after touring the Fremont factory and Reno Gigafactory. Now, they might stop producing cars in 10 years and just make energy generation/storage products. But that's far from bankruptcy.

 

[Johann Koeber]

Well, yes delivery of the M3 might be delayed.

But the roadster is a good example: the car is so good that people have put up with the delay and were very happy they did.

Tesla has the most dedicated customers in the industry. The cars are just SO good.

Go for it and do not worry. We are there beside you.

 

[WannabeOwner]

If I was nervous I would have leased. But I wasn't, so I paid cash

 

[Waiting4M3]

Indeed, but what will happen if they delay the delivery ? And regarding to the comments I've seen, it's gonna happen. That's one of the points we were discussing with my associate. He says that if the deliver is delayed again (many customer were unhappy with the Roadster already), the stocks are going to loose value etc. But well, wait and see.

Delays will impact the stock price temporarily but it has nothing to do with the long term health of the company. If any large traditional car company is competing seriously with Tesla then the delay would worry me more, but as is, all those guys are shooting after targets 5 years behind Tesla. Just look at how BMW's "why wait for Tesla" advertisement failed. Short term stock price fluctuation is not your problem if you just want to buy the car. Let the banks and option traders play their Russian roulette every day, grab a drink, enjoy the carnage.

 

[sandpiper]

I'm a Tesla owner and investor. I don't think they're going bankrupt.

The good news is that if they do go bankrupt the company won't simply evaporate. They've built too much of a brand. Someone will acquire them. That means that service, support, development etc will likely continue on even if Musk goes bust.

The risk here is really really low. The American ICE manufacturers were MUCH closer to going bankrupt in 2008/2009 than Tesla is today and people still bought their cars.

I agree. Personally, I think there's a 50/50 chance that Tesla is an independent company in 5 years, but it really doesn't matter. The worst case scenario, I think, is as follows:

1. Tesla can't get the cash to complete the Model 3, Gigafactory etc... Elon and group would realize this long before it becomes public.
2. Elon and group start quietly fishing around for some deep pockets.
3. Some public rumblings come out and the stock starts to tank.
4. At some point the stock becomes attractive enough that somebody - Apple / Google / Mercedes / Chinese buyer decides to buy them out. Existing shareholders might take a bit of a bath.
5. Tesla brand, service, support and Superchargers continue, perhaps even with Elon in a somewhat chastened role.

The company/brand/technology is too big and valuable for it to completely die now. Nothing is more valuable than an enthusiastic mob of fans that are willing to reach deep into their pockets to pay a premium to buy your product.