The "Is Tesla Going Bankrupt?" thread

[goto10]

Even if Tesla does go bankrupt, I can't imagine a scenario where the cars stop being manufactured or supported any time in the near future.

 

[kbM3]

The price of tesla stock is very clearly way too high given company value in my opinion. This leaves it ripe for short sellers. So short sellers have been hitting on Tesla with articles trying to get the price to fall for many many months. Bigtime doom and gloom is what they publish trying to convince stockholders they need to panic sell now to get the price down so they can short sell and make millions. I've made approximately $92k profit over the years on Tesla stock. But I own none now. A reduction in price is coming but I honestly do not believe bankruptcy is coming.

I take delivery of a red model x 100D this afternoon.

TSLA is in all likelihood going to appreciate at > 30%/year for the next 10 years. It is anything but too highly priced.

 

[kbM3]

Musk has always run Tesla near the edge of bankruptcy which is probably why he can't hold onto the senior financial officers. As an officer you are responsible and if you take actions that are not in the best interests of your shareholders you risk civil and criminal liability.

As a fan, and owner, I question: Why didn't Tesla raise capital with a stock sale back when the stock was flying high in the mid/upper 300s? Why did they instead do a debt offering? It made no sense then and now they have been downgraded and the stock has dropped so they will have a harder time raising funds and it will be even more dilutive. Seems like a major mistake unless there was a good reason:

I've read 2 rumors/theories as to why...
1. (popular short theory): That TSLA is secretly under SEC investigation and cannot sell stock without disclosing this fact.
2. That Elon had too much Greed/Pride to do another dilutive stock offering.

Disclosure: I hold no positions in TSLA, just a fanboy..
Thoughts?

Thoughts: Management didn’t think they needed to raise capital.

 

[BestRadar]

At some point Tesla needs to make a profit. Selling Model 3's at a loss and hoping Model S + X sales will carry the loses is not a good plan. Model S + X sales are going down now that the Model 3's are selling for so much less. Something will have to give eventually. Don't also get me started on all those $3000 refunds they will eventually have to start giving out for all those FSD purchases that are not coming to fruition.

 

[theschnell]

Musk has always run Tesla near the edge of bankruptcy which is probably why he can't hold onto the senior financial officers. As an officer you are responsible and if you take actions that are not in the best interests of your shareholders you risk civil and criminal liability.

As a fan, and owner, I question: Why didn't Tesla raise capital with a stock sale back when the stock was flying high in the mid/upper 300s? Why did they instead do a debt offering? It made no sense then and now they have been downgraded and the stock has dropped so they will have a harder time raising funds and it will be even more dilutive. Seems like a major mistake unless there was a good reason:

I've read 2 rumors/theories as to why...
1. (popular short theory): That TSLA is secretly under SEC investigation and cannot sell stock without disclosing this fact.
2. That Elon had too much Greed/Pride to do another dilutive stock offering.

Disclosure: I hold no positions in TSLA, just a fanboy..
Thoughts?

Or 3. They thought the debt financing would be enough to hold them over until M3 ramped and they would not have to come to the market for more, in which case taking debt would be the smarter of the two options...

Edit: kbM3 beat me to it...I was replying to an email and didn't realize 20 minutes had gone by...

 

[PhaseWhite]

Thoughts: Management didn’t think they needed to raise capital.

Yeah, clearly that bet didn't work out well... However there's a reason I keep a large cash fund around, it's because it offers security in case something unexpected happens... Seems like that would have been the responsible thing to do when the cash was cheap.

 

[Knightowl]

Okay so I get called a Tesla fanboy all the time here but... I'm seriously concerned about this article I just read and I realize I don't know enough about what I'm reading to know if it's FUD or real...

Tesla is just months from a total collapse, says hedge-fund manager

My Model S lease is up in November, I only have a few months left before I have to order my next Tesla... Is there going to be a Tesla in a few months or am I grossly overreacting to one article?

Thanks,
Jeff

I bought more shares today on the downtrend at $285, yeah not the bottom but I am terrible at timing bottoms and just have limits that if reached I buy. Have just been accumulating shares over time as a long term investor and will continue to do so when opportunity presents. I have no doubt that Tesla will continue as long as Elon is running it. I am hoping for $1k share price in 10yrs, will see

 

[dhrivnak]

I bought a Model 3 yesterday and it is fantastic. The lot had many cars staged for new owners. I think they will pull through this, and I for one am betting they will.

 

[Kruegmeister]

Watch the Movie "The Big Short"
Your Stock Broker Friend is most likely an idiot, they have no idea.
If they do have an idea then they are Insanely Rich, because they have an idea of what will make money and what won't. So how rich is your friend? Even given that idiot Stock brokers get rich too... again watch The Big Short (about the 2007 market crash)

 

[Tiger]

Bankruptcy simply means that the company goes for sale to the highest bidder, it is not the end of a company. It's just a tactic to overturn management (and ofcourse new ownership goes to/through creditors instead of stockholders).

Shorting the stock might still be in the sights though, but it's difficult to predict the future whether Tesla gets its sh*t together in time:

 

[brkaus]

Funny, the initial post was written in 2016 saying Tesla is going bankrupt. His/her associate was going to wait 2-3 years before buying a Tesla. Well, it has been 2 years...

 

[Matias]

Don't shoot the messenger..

HEDGE FUNDER JOHN THOMPSON: Tesla is 'on the verge of bankruptcy'

 

[kbM3]

Yeah, clearly that bet didn't work out well... However there's a reason I keep a large cash fund around, it's because it offers security in case something unexpected happens... Seems like that would have been the responsible thing to do when the cash was cheap.

You can’t say that bet didn’t work out well. So far they have not had to raise cash.

If they have to raise cash in the future under worse conditions, THEN you could say it didn’t work out well. Do you understand?

 

[AZ Desert Driver]

I don't like it when a young company - investing in its future; is compared to a 100 YO company with loads of infrastructure paid for years ago. Cash flow is different at different stages of company growth - and the hedge fund guy knows this, but still comes out and predicts doom. Why did he make this prediction? could he be trying to force the stock down so he could profit? Is this type of behavior legal?

 

[berserk_sun]

You must be out of your mind to believe these hedge fund managers.
If 2 years of Model X delay won't kill Tesla, how come 3 months delay on Model 3 with increasing Model S/X delivery will bankrupt Tesla?

 

[comanchepilot]

Well - the actual hedge fund manager is short Tesla . . . so that explains the opinion.

 

[comanchepilot]

The only reason Tesla has not filed chapter 11 is people giving them free loans in the form of deposits for cars they may never get.

 

[AZ Desert Driver]

Yes - this guy has been shorting Tesla aggressively for quite some time - is a "famous" Short.
I don't mind having investors create a philosophy and execute buy/sell on that strategy. But what irks me is when they spread FUD to enhance their position at the expense of stable investors and business folks. They profit by intentionally hurting others. Makes me want to extract revenge.

 

[sakimano]

This hedge fund manager manages $25 million.

For perspective, most brokers manage $100 million. Most hedge funds are measured in the billions and most mutual funds are too...some in the trillions.

At $25 million this guy is a nobody.

Still, the tesla math doesn't really make sense. Here's my simplified way of looking at it.

• Imagine Tesla sold 2 million cars a year.
• Imagine they sold those cars for $60,000 each on average (some low volume S/X/Roadster...some high volume 3 and Y)
• Imagine then that they had a 5% profit margin on those cars on average.

That's $6 billion a year in profit.

It's currently trading at $48 billion in market cap. Which would be 8x earnings on that scenario I outlined where the company is selling 20x as many cars as it did last year, and is doing so very profitably.

Some might argue 'but growth mandates a bigger multiple'...sure that's the argument today when they're tiny. But that scenario I outlined is a mature Tesla that is sized with BMW, Mercedes or Audi. Those companies took 100 years to get there by the way.

What would their growth prospects be AFTER they reached 2 million cars a year? Growth beyond that 2 million cars a year level is tough thanks to competition and the economic limitations of selling fancy cars that the marjority of the world could never afford.

So they need to hit on all cylinders to get to that level, and be profitable, and remain solvent for a decade on the way there...to get to a fair valuation and market cap for today's stock price.

So either you think Tesla is going to grow way beyond 2 million fancy cars a year and have loads of faith in their other businesses...or you hate money because you're paying today what the company will maybe be worth in 10 years. I have trouble with that. I'm not a growth investor/gambler though so temper my thoughts with that.

 

[tander]

This hedge fund manager manages $25 million.

For perspective, most brokers manage $100 million. Most hedge funds are measured in the billions and most mutual funds are too...some in the trillions.

At $25 million this guy is a nobody.

Still, the tesla math doesn't really make sense. Here's my simplified way of looking at it.

• Imagine Tesla sold 2 million cars a year.
• Imagine they sold those cars for $60,000 each on average (some low volume S/X/Roadster...some high volume 3 and Y)
• Imagine then that they had a 5% profit margin on those cars on average.

That's $6 billion a year in profit.

It's currently trading at $48 billion in market cap. Which would be 8x earnings on that scenario I outlined where the company is selling 20x as many cars as it did last year, and is doing so very profitably.

Some might argue 'but growth mandates a bigger multiple'...sure that's the argument today when they're tiny. But that scenario I outlined is a mature Tesla that is sized with BMW, Mercedes or Audi. Those companies took 100 years to get there by the way.

What would their growth prospects be AFTER they reached 2 million cars a year? Growth beyond that 2 million cars a year level is tough thanks to competition and the economic limitations of selling fancy cars that the marjority of the world could never afford.

So they need to hit on all cylinders to get to that level, and be profitable, and remain solvent for a decade on the way there...to get to a fair valuation and market cap for today's stock price.

So either you think Tesla is going to grow way beyond 2 million fancy cars a year and have loads of faith in their other businesses...or you hate money because you're paying today what the company will maybe be worth in 10 years. I have trouble with that. I'm not a growth investor/gambler though so temper my thoughts with that.

Not exactly sure what you are saying but unless the sky falling headlines are believed, it's likely that cars will only be part of the business in 10 years. If the ten year valuation is solely on car sales, you will likely not be accounting for income from solar, batteries, ? products. Take a look at how big the market is for roofing products. Then think about the possible market for batteries. Then think about how A.I. is going to shape product and software design. Or compare Apple in 1997 to 2007 when they first started selling iPhones.