Concerned about TSLA financial health, reconsidering ordering new MS

[Moneesh]

My 2016 MS 90D (refreshed fascia and AP 1.0) lease is up in about eight weeks and with the recent Model S/X upgrade announcement, I was thinking of upgrading to a 2019 MS Performance (with free Ludicrous mode for current owners/lessees). Instead of leasing my next Tesla, I was planning on buying, given AP 2.0 hardware and recent drivetrain and range upgrades, it would be worth keeping.

However, Tesla's recent $702M loss and a similar or larger loss expected for next quarter has me really concerned about their viability. Taking into consideration $2B cash on hand, means that a capital raise is right around the corner. That leads to dilution of stock, loss of confidence in the company and uncertainty/disarray ahead in the next 18 months.

I run large businesses and am vary familiar with capital markets, so maybe I am overthinking the situation? I don't want to be the owner of a $130k car that's depreciated significantly, then 18 months later wondering if the company is viable for the long term or hoping that APPL buys them out (which in the long term may not be too bad).

I have to decide what to do in the next two weeks. Do I order my new MS or purchase or do I lease a BMW M550i Sport and see where Tesla is in 3 years, in hopes to come back to the brand? Would love your thoughts.

 

[TMThree]

The articles are written by people who hate Tesla.

There is nothing saying Tesla needs to dilute shares this year.

 

[Blu Angel]

The articles are written by people who hate Tesla

Absolutely True!
@TMThree,

I would most definitely order the Tesla S/X with Performance and
get Ludicrous free($20,000 value)

 

[testarossa]

Why not just lease a Tesla if you're worried about depreciation instead of going with a staid alternative? Posting on a Tesla board about the viability of the company will give you expected answers.
Tesla is not going away, go with what you like.

 

[bsilva]

Which do you want to drive for the next few years, a new Tesla Model S or the BMW?

It's hard to really know what's happening with the company. There's so much FUD coming from the anti-Tesla crowd and shorters. We also understand that Elon is eternally overly optimistic, so you can just take his word either. Obviously the news that's come out in the last month, and especially this week with the Q1 financials, even for the biggest fanboy, it's concerning. The erratic jumping around of prices and features is not confidence inspiring.

The way I think about it is to ignore as much of the noise as possible and just enjoy the car. I really love driving the Model 3. I love the driving experience, I love the OTA updates with new features, I love the UX, I kept my Audi Q5 but only drive it now when I really need to (I am a prime candidate for trading the 3 for the Y when it's out). I accept that Tesla is a volatile, erratic company with questions about its future. But then I get in the car and it all fades away.

If it were me, I'd get the new Model S enjoy the car, and if something happens with the company down the road, then deal with it

 

[CarlK]

Not trying to be cute but I believe BMW has a much greater chance to fail than Tesla. Especially when the FSD is released later this year or next year. All those auto companies that could not come up with something similar, I don't think any of them could in at least five years, will be selling horses. I know some of you might say this is just Elon's wild dream but if you have watched the Monday event it's closer than even the most optimistic of us could have imagined before.

 

[Dutchie]

Go with BMW. Good luck to you!

 

[Evoforce]

Ha! Buy the better car (Tesla) and help put Tesla over the top. They sell cars, buy one and help their bottom line...

 

[Watts_Up]

I run large businesses and am very familiar with capital markets, so maybe I am overthinking the situation?

I don't know anything about economic, but Tesla cars are absolutely great technological products.
Even after ten years Tesla has no real competitor, so worse Apple for example could bought Tesla, but the product will stay.

Instead of criticising Tesla, all those stock brokers should talk how China is going to dominate the EV industry.

BMW sales in US have been jumping especially since the Model 3 was sold.
BMW had a good start in the EV world with Argonaut based on the BMW 3 Series.
But they went in another direction with the i3 and the i8, both kind of a flop, mostly because of the selling price.

Unless you need a gas or hybrid car, because of range constraint, since you already own an EV
and assuming you can charge a home, I don't think you would enjoy not having an EV for your next car.

 

[jb007gd]

If you:

1) enjoy driving a Tesla and
2) are concerned about the financial health of the company,

boy have I got great news for you!

Turns out you're in the perfect position to address both of the issues above!

 

[svp6]

Lease the model S if concerned. The M550 is a nice car, but nowhere near the S. Also the fully configured performance S is now much cheaper at 106.5k. if you order now you will get ludicrous for free.

 

[⚡️ELECTROMAN⚡️]

Not sure how you could go back to a petrol car after living with a Tesla. Pretty obvious you want another Tesla. They aren't going anywhere. Tesla continues to double their sales year over year. Lots of growing pains right now, but they will get through it.

 

[Triplett]

I can tell you're not a stock trader by profession....

 

[ewoodrick]

I think that Tesla is doing the exact right thing. They are investing in the future as opposed to making Wall Street happy.

As a new growing company, they really need to be investing in the future.

 

[juliusa]

However, Tesla's recent $702M loss and a similar or larger loss expected for next quarter has me really concerned about their viability.

Then buy the car, not the stock.

 

[Moneesh]

Then buy the car, not the stock.

I understand your point, however buying a car is making a bet on the viability of the company and their ongoing operations, which includes availability of parts, service and ongoing investment in their software/hardware platforms.

Many had the same concerns about Amazon in the first decade, where they were focused on building infrastructure and scale, which required massive investments and no sign of profitability for years. However, the Amazon capital investment strategy/structure seemed well thought out and there was a level of transparency. With Elon, he is a visionary, but has the scale of the company and his other ventures outgrown his financial management capabilities? When there is significant turnover in the financial ranks the the CEO has issues with the SEC, it does require some pause.

I will likely buy the car, but buying it is a bet that the company will be viable and thriving for years to come -- which is why I posed the question to others to get additional views.

 

[juliusa]

I understand your point, however buying a car is making a bet on the viability of the company and their ongoing operations

I disagree. If Tesla cannot figure out how to continue to operate as a company, they or their assets will be purchased. Shareholders will be bummed - not car owners.

 

[bsilva]

Which do you want to drive for the next few years, a new Tesla Model S or the BMW?

It's hard to really know what's happening with the company. There's so much FUD coming from the anti-Tesla crowd and shorters. We also understand that Elon is eternally overly optimistic, so you can just take his word either. Obviously the news that's come out in the last month, and especially this week with the Q1 financials, even for the biggest fanboy, it's concerning. The erratic jumping around of prices and features is not confidence inspiring.

The way I think about it is to ignore as much of the noise as possible and just enjoy the car. I really love driving the Model 3. I love the driving experience, I love the OTA updates with new features, I love the UX, I kept my Audi Q5 but only drive it now when I really need to (I am a prime candidate for trading the 3 for the Y when it's out). I accept that Tesla is a volatile, erratic company with questions about its future. But then I get in the car and it all fades away.

If it were me, I'd get the new Model S enjoy the car, and if something happens with the company down the road, then deal with it

Oops, I obviously meant to say, "We also understand that Elon is eternally overly optimistic, so you can't just take his word either."

 

[bsilva]

I understand your point, however buying a car is making a bet on the viability of the company and their ongoing operations, which includes availability of parts, service and ongoing investment in their software/hardware platforms.

Many had the same concerns about Amazon in the first decade, where they were focused on building infrastructure and scale, which required massive investments and no sign of profitability for years. However, the Amazon capital investment strategy/structure seemed well thought out and there was a level of transparency. With Elon, he is a visionary, but has the scale of the company and his other ventures outgrown his financial management capabilities? When there is significant turnover in the financial ranks the the CEO has issues with the SEC, it does require some pause.

I will likely buy the car, but buying it is a bet that the company will be viable and thriving for years to come -- which is why I posed the question to others to get additional views.

These are all good, rational points. The behavior of the company, the declining cash position, gives one pause.

But... life is short. Enjoy it. Buy the car you'll enjoy the most over the next couple of years. You spend a large portion of your life in your car, you might as well have a car you really enjoy.

The likely "worst" case scenario is that someone buys Tesla. They have too much of an asset with their technology, Supercharger network, enthusiastic owners, and massive amount of valuable data they're accumulating for the company to just disappear. Life will go on.

If you're contemplating a $100k car, either the Tesla Model S or the BMW, then you're likely well off enough financially that it won't really matter in the grand scheme of things what happens to the car's value. You're not married to your car. You can always sell it and get something else if it doesn't work out.

 

[Ludalicious]

My 2016 MS 90D (refreshed fascia and AP 1.0) lease is up in about eight weeks and with the recent Model S/X upgrade announcement, I was thinking of upgrading to a 2019 MS Performance (with free Ludicrous mode for current owners/lessees). Instead of leasing my next Tesla, I was planning on buying, given AP 2.0 hardware and recent drivetrain and range upgrades, it would be worth keeping.

However, Tesla's recent $702M loss and a similar or larger loss expected for next quarter has me really concerned about their viability. Taking into consideration $2B cash on hand, means that a capital raise is right around the corner. That leads to dilution of stock, loss of confidence in the company and uncertainty/disarray ahead in the next 18 months.

I run large businesses and am vary familiar with capital markets, so maybe I am overthinking the situation? I don't want to be the owner of a $130k car that's depreciated significantly, then 18 months later wondering if the company is viable for the long term or hoping that APPL buys them out (which in the long term may not be too bad).

I have to decide what to do in the next two weeks. Do I order my new MS or purchase or do I lease a BMW M550i Sport and see where Tesla is in 3 years, in hopes to come back to the brand? Would love your thoughts.

Dont buy a luxury vehicle that's guaranteed to lose value if you are worried about resale value. Sounds like you should be looking at a high priced Toyota... Might I suggest A Lexus