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CuriousSunbird: Tesla must raise capital

ggr

Expert in Dunning-Kruger Effect!
Moderator
Mar 24, 2011
7,282
31,577
San Diego, CA
In 2012, Musk said they would be profitable that year and wouldn't need to raise capital.
From that article:
He predicted that the firm will become "cash-flow positive" at the end of November.
Cash flow is a different metric than profitability, and Tesla still faces significant challenges as it moves to ramp up production.

In 2014, Musk said they'd be profitable by Q3 2015.
I can't check this one because I won't pay the Rupert Rag to read it.

In Q1 2015, Musk said they'd be profitable by Q4.
From that article:
confirming the company will be cash-flow positive in Q4 this year.
See above. Oh, and three quarters later, Tesla actually was cash flow positive.

In Q4 2015, Musk said they'd be profitable by Q1 2016.
From that article:
Musk, speaking on Tuesday's conference call, said the company has an "aspiration" to be cash flow positive in the first quarter.

In 2016, Musk said they'd achieve full-year profitability and would not need to raise capital.
And you've conveniently forgotten that after the Model 3 launch, and 400,000 deposits, they said that they're going to spend money to bring the Model 3 volume forward.

In 2017, Musk said they would be cash flow positive by Q4. Q4 posted a record loss.
Yes, before they knew that the Model 3 ramp was delayed. He since said it was behind by 2-3 quarters, which would be Q3 2018. "Forward looking statements".



 

Uncle Paul

Well-Known Member
Nov 1, 2013
6,299
7,648
Canyon Lake,CA
Tesla is a pretty smart company. A couple times in the past the decided to raise money, not because they had to, but because the terms they could get made the timing right and the funding very inexpensive.

If money is cheap, companies often borrow to build a buffer against unexpected expenses.

These funds can also be used to accelerate production or operate more efficiently.

In other words, while Tesla may not need to raise money, they may choose to raise money.
 
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I am not an active investor, but I am always curious about the endless discussion abiut Tesla's need to raise money. They may or they may not. Either way I don't see a problem. If a company like Uber, with 0.5 billion loss every quarter can raise $10bn from SoftBank, I don't see how a company with 400,000 pre-orders will ever have liquidity issues, especially if capital requirements are "merely" in 1-2bn range. SoftBank alone has a $100bn fund. On top of that Asian and Middle Eastern investors are looking to diversify their billions. There is currently bottomless liquidity in the market
 

schonelucht

Well-Known Member
Mar 10, 2014
5,080
9,788
Nederland
If you assume the operating cash burn is closer to zero over the next 12 months, things look rosier. Means they can spend a billion+ on capex and still be fine.

Yes. This the crux of the argument. And it all comes down to Tesla hitting volume and margins on the M3. There are reasonable arguments to make both ways on those goals.
 
What does the share price have to do with it? If they don't need to raise more capital the share price is completely irrelevant, since Tesla doesn't get any of the money from stock trading. And you don't need to assume 30% gross margin either. The numbers are easy to crunch, and others have done so already, but you choose to ignore them.
Because if the share price is over $360 in Feb they can repay the $900 million convertible in shares instead of in cash. Don't you people even read the financial reports?
 
I am not an active investor, but I am always curious about the endless discussion abiut Tesla's need to raise money. They may or they may not. Either way I don't see a problem. If a company like Uber, with 0.5 billion loss every quarter can raise $10bn from SoftBank, I don't see how a company with 400,000 pre-orders will ever have liquidity issues, especially if capital requirements are "merely" in 1-2bn range. SoftBank alone has a $100bn fund. On top of that Asian and Middle Eastern investors are looking to diversify their billions. There is currently bottomless liquidity in the market
You have liquidity problems when your working capital is negative $1 billion, when your free cashflow is negative and when you have committed more than $30 billion in payments over the next few years.
 

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