Tesla bought out: saviour or curse?

[TT97]

Stock value has everything to do with the market's expectation of solvency.

I completely agree, but, expectation of solvency does not equal to solvency, however, as was stated, Tesla has enough believers that it can continue to be funded for a long time until they can consistently turn a profit.

I don't foresee Tesla going bankrupt (although I also worked at a mortgage company in 2007) and can't imagine Tesla ever selling as a whole. If it were to fail, I am guessing Tesla being parted out. I can see the super charging network bought by a company and converted into for-profit charging (and possibly change to CCS). The battery, motors and FSD (depending on progress) technology will also have residual value. I can't imagine Solar City would survive and the Fremont factory would almost definitely close (the Bay Area is not conducive for manufacturing).

 

[omgwtfbyobbq]

I completely agree, but, expectation of solvency does not equal to solvency, however, as was stated, Tesla has enough believers that it can continue to be funded for a long time until they can consistently turn a profit.

I don't foresee Tesla going bankrupt (although I also worked at a mortgage company in 2007) and can't imagine Tesla ever selling as a whole. If it were to fail, I am guessing Tesla being parted out. I can see the super charging network bought by a company and converted into for-profit charging (and possibly change to CCS). The battery, motors and FSD (depending on progress) technology will also have residual value. I can't imagine Solar City would survive and the Fremont factory would almost definitely close (the Bay Area is not conducive for manufacturing).

Having a bunch of cash helps too. It gives them some buffer if they have problems turning a profit on $InsertNewProductHere. If they stop growing and still can't make a profit, that won't look good, but I don't see them facing bankruptcy if they continue to roll all of their profits into expansion and maintain good profit margins on their products.

 

[Chickenlittle]

It's debatable how close to bankruptcy Tesla is - don't start, we'll never agree! - but assuming it was:

• What would you think if Tesla got bought out to ensure it's continued existence?
• Would it matter who bought them for you to still buy a Model 3?
• If only Daimler, Alibaba or Petro China would save the company, would that matter? I mean, if the alternative would be they folded and your precious Model S or X was an orphan, or you would never ever receive a Model 3 (and forfeit your $1,000!), would you really be against a legacy / "foreign" company owning Tesla?
• Would you still want to buy a Tesla if Petro China owned them? or switch (with gritted teeth) to a Bolt?
• If they kept Elon onboard (assuming he'd stay)? If they didn't?

I get really exhausted by all the vitriol on these forums -- is it so hard to say, "I see your point, I just disagree" and move on? do you really have to say "the fact is Tesla's sales will be _____ in the future [a contradiction BTW] and you're WRONG"? This hypothetical post will surely spike a lot of the same. Maybe not. Let's hope not.

So you start the thread by asking anyone that disagrees with you not to express why. You exhaust me

 

[ebmcs03]

Apple will buy them

 

[jkirkwood001]

So you start the thread by asking anyone that disagrees with you not to express why. You exhaust me

Start another thread about IF they're going bankrupt. My question assumes they HAVE gone bankrupt - what would you do? Fair?

 

[jkirkwood001]

Tesla has been providing excellent shareholder returns, just compare past and present stock valuations. If you want cash, you must sell some of your stock. The companies which bring in profits actually perform worse because they have to pay taxes on retained profits. 100% plowback is the most efficient strategy for an investor.

Doesn't Tesla pay dividends? (Cash without selling stock)

 

[ggr]

Doesn't Tesla pay dividends? (Cash without selling stock)

No. Very few big tech companies pay dividends, they invest all spare cash in growth instead.

 

[djplong]

True words of an Apple fanboy... Even if I had the option for CarPlay I think TeslaOS is a lot more sleek, clean, and functional in the M3.

Not hardly. Don't confuse my words with actually WANTING this to happen - I don't. I'm merely saying that there ARE benefits there. Just because I *do* have an iPhone doesn't mean I wouldn't also want to see AndroidPlay in a Tesla.

Just for comparison, I spent many years, until recently, as a Windows developer.

I would MUCH rather see Tesla succeed on it's own. My *only* concern (and I'm a stockholder) is that the CapEx burn is just going to keep going and going as they build new plants for the Model Y, the semi, the pickup and the new Roadster. I have no idea if the cash flow from the Model 3 (once it's up to speed) will be enough to slow down the debt growth. I'd like to think that they'll get the margins they want on the '3' and that will be able to finance the rest of the build-out to have a complete lineup of vehicles and be firmly established as a major manufacturer.

 

[omgwtfbyobbq]

Not hardly. Don't confuse my words with actually WANTING this to happen - I don't. I'm merely saying that there ARE benefits there. Just because I *do* have an iPhone doesn't mean I wouldn't also want to see AndroidPlay in a Tesla.

Just for comparison, I spent many years, until recently, as a Windows developer.

I would MUCH rather see Tesla succeed on it's own. My *only* concern (and I'm a stockholder) is that the CapEx burn is just going to keep going and going as they build new plants for the Model Y, the semi, the pickup and the new Roadster. I have no idea if the cash flow from the Model 3 (once it's up to speed) will be enough to slow down the debt growth. I'd like to think that they'll get the margins they want on the '3' and that will be able to finance the rest of the build-out to have a complete lineup of vehicles and be firmly established as a major manufacturer.

Why are you worrying about debt growth alone as opposed to something like debt to revenue? It would be great if Tesla could ramp for the Model 3 on the same time frame they are now without incurring additional debt, but that's tough.

 

[djplong]

At *some* point the CapEx HAS to level off. You can't lose money *forever*.

 

[omgwtfbyobbq]

At *some* point the CapEx HAS to level off. You can't lose money *forever*.

They can't lose money forever, and they can't grow forever either. If they stop or slow growth, I imagine the market will want to see profits, ala 2016 with the S, and I think the market will be OK with losses as long as they are proportional to CAPEX and revenue increases.