doggusfluffy
Closed
Am I missing something here? Given Deepak's comments regarding the ramp and CF positive timeline...doesn't this hint at some difficulties rather than a bullish signal?
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Short-Term TSLA Price Movements - 2015
- Thread starter Robert.Boston
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ev-enthusiast
Active Member
The narrative on TSLA is a growth story. People were worried, rightly or wrongly, that Tesla was going to be impeded in its growth by cashflow concerns, thus the shares took a hit recently. This alleviates that for the time being.
jhm
Well-Known Member
It's the positive catalyst nobody saw coming!
My feeling is that a stock offering allows Tesla to swing for the fences. Let's see where this ball lands.
sub
Active Member
I'm not complaining but it makes no sense that people see Tesla as less risk after a new offering. They clearly can do this anytime they need to do it, so there really isn't more or less risk today. Don't tell whoever is buying that though.
Citizen-T
Active Member
ev-enthusiast
Active Member
The 246.80 level does not look like impossible today.
Let's see if we can close above that level.
It's because the market reaction in the past few days was bracing for a larger round of capital raise (more dilution than 2.1mm shares). However, I still feel like the timing of this bodes ill for the near term MX ramp up.
ev-enthusiast
Active Member
everman
Member
I fear the worst for my $231 limit buy order... :tongue:
Will be be evaluating repositioning that throughout the morning.
Will be be evaluating repositioning that throughout the morning.
Gtoffo
Member
We must assume Elon and Deepak had mostly already decided to raise capital at the time of the ER call and that the size of the round had been decided.
In those few days it is improbable that their estimates regarding Model X production have changed much. So I would consider their statements regarding Model X and Cash flow to be a good estimation of what they are actually expecting today.
This "small" raise feels more like a security margin than a necessity to me.
It corresponds exactly to 1 extra quarter of free cash flow at current levels (TSLA Quarterly Cash Flow Statement - Tesla Motors Inc. Quarterly Financials). Considering they have 1 billion in the bank they now have 3 quarters of runway at current expense levels. Only 2 quarters of runway meant that if anything went wrong with Model X they would have been cutting it extremely close. With 50% more runway they have derisked the launch significantly.
In those few days it is improbable that their estimates regarding Model X production have changed much. So I would consider their statements regarding Model X and Cash flow to be a good estimation of what they are actually expecting today.
This "small" raise feels more like a security margin than a necessity to me.
It corresponds exactly to 1 extra quarter of free cash flow at current levels (TSLA Quarterly Cash Flow Statement - Tesla Motors Inc. Quarterly Financials). Considering they have 1 billion in the bank they now have 3 quarters of runway at current expense levels. Only 2 quarters of runway meant that if anything went wrong with Model X they would have been cutting it extremely close. With 50% more runway they have derisked the launch significantly.
jhm
Well-Known Member
Use of Proceeds
It is good to read the Use of Proceeds statement carefully. It reads:
Nowhere does this statement say that proceeds will be used for the Model X launch. Moreover the immediate use of will be to buy highly liquid cash equivalents. Tesla is sending a clear message that the Model X launch is not in question. Rather this is about accelerating the business post-launch of Model X.
We need to be clear about this.
It is good to read the Use of Proceeds statement carefully. It reads:
Nowhere does this statement say that proceeds will be used for the Model X launch. Moreover the immediate use of will be to buy highly liquid cash equivalents. Tesla is sending a clear message that the Model X launch is not in question. Rather this is about accelerating the business post-launch of Model X.
We need to be clear about this.
While use of proceeds didn't say anything about Model X, you can be pretty certain the reason they needed to do a raise was because of Model X delays. $500M is one quarter of cash burn? Based on this and other very strong rumors, Model X won't ship in volume until 1Q16...
It's not being used for the MX but consider the following:
IF the Model X ramp up looked to be in time for significant Q4 deliveries, it's highly probable that news would move the share price up. An opportunistic management team would wait until then to raise capital (more capital and/or less dilution).
In other words, if the X ramp up looked smooth this wouldn't be the most opportunistic time to raise capital. Therefore, it's a net new indication the X ramp up may indeed be slower than anticipated
jhm
Well-Known Member
How many Model X did you hope Tesla might deliver this year? About 5000, maybe. So on 5000, Tesla optimistically generates $125M in gross profit. This is out of scale with $500M by 4 times. It does not hold that Tesla would raise this magnitude of cash to finance a delay in the Model X ramp.
Moreover, if they were attempting to finance a delay, that would mean they would need to spend more cash developing the Model X and the production line. If this were truly the intent, then Tesla has misrepresented its intent in an SEC filing.
So basically you are claiming with "certainty" that Tesla has filed a misrepresentation with the SEC on grounds of "very strong rumor."
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