Does anyone seriously think that Telsa would go Chapter 7, shut down the works and no one would pick up the operation? That’s nonsense. Someone would buy them, in a heartbeat.
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The "Is Tesla Going Bankrupt?" thread
- Thread starter Swissmoneychf
- Start date
Does anyone seriously think that Telsa would go Chapter 7, shut down the works and no one would pick up the operation? That’s nonsense. Someone would buy them, in a heartbeat.
dhanson865
Well-Known Member
You could start a thread about if crosswalks are more black than white or more white than black and get a longer thread than this. The length of the thread doesn't make the concept valid.
dhanson865
Well-Known Member
Key fobs, paired phones, and key cards will still work even if all Tesla servers are shut off.
You won't get any more sweet Autopilot improvements or Fully Self Driving if they disappear but you'll still be able to drive the cars.
You'd even be able to update the firmware on cars that didn't get the newest firmware by going to people like Jason Hughes and having them copy the last known good firmware from one car to another. Once he got the last known firmware he'd have it for everyone else that wanted it.
AZ Desert Driver
Rare combination
'splain what this is. Are you saying that TSLA should be selling at $200/share, near where it was two years ago?
AZ Driver
You have to realize that is a two-sided coin. During the time Jim Chanos and others were touting the stock to investors they held long positions themselves. Whether they still do after the last five trading days is unknown. Tesla is sure taking body blows in the last week. Some completely out of their control (Uber crash, Nvidia suspending testing, judge granting shareholder Solar City suit to move forward, etc). And of course the biggie is the slow ramp of Model 3.
Jack
So I am sitting on that committee and listened to your pitch. Here are the problems I see with your logic.
1) Other manufacturers are producing and selling millions of cars each and generating billions in profits. In 2017 Tesla sold just over 100,000 units and lost $1.9 billion. Obviously, the others have significantly more manufacturing capacity.
2) No one has proven demand for millions of BEVs in 2018, while 90 million+ ICE vehicles will indeed get sold.
3) While Tesla touts sales dollars at retail levels, others sell cars at wholesale and thus avoid the actual costs of sales, service, and charging that Tesla is forced to absorb. These rising SG&A and other costs are what is sinking Tesla in losses. In 14 years Tesla has never had an annual profit. So with Ford and GM selling for a fraction of Tesla shares and paying dividends, why should we be shareholders in Tesla? It seems you want the committee to pay a price for Tesla shares they may never grow into.
It also appears Tesla's business model is flawed. perhaps fatally unless they can keep the cash flowing in through asset sales or equity raises. What happens if the spigot gets turned off as is rumored to be happening soon, if not already?
If Tesla was selling at $25 you might have a valid idea. But at $250+ your proposal seems ill-fated. It would seem the market makers are beginning to come to the same conclusion based on recent price actions.
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Kruegmeister
Member
Searched "JOHN THOMPSON 2007 crash"
Nothing came up so he's apparently NOT an expert on anything...
Just another schlep on Wall Street... IMHO
AZ Desert Driver
Rare combination
You are comparing a mature company with mature /depreciating manufacturing to a startup with heavy infrastructure needs. apples/oranges.
You are comparing a history of ICE cars to a new demand for a new car- not proven to be sure, but with obvious interest. Reminds me of when a desktop computer was being introduced, even the term "software" was hard to grasp, and manufacturing of software was upside down in investment and production when compared to more durable goods.
It seems like the cherry-picking of economic data is closer to FUD than a realistic evaluation.
You are comparing a history of ICE cars to a new demand for a new car- not proven to be sure, but with obvious interest. Reminds me of when a desktop computer was being introduced, even the term "software" was hard to grasp, and manufacturing of software was upside down in investment and production when compared to more durable goods.
It seems like the cherry-picking of economic data is closer to FUD than a realistic evaluation.
Let's let the first full year of sales for Model 3 determine true "demand". Refundable reservations are not sales. The sales conversion rate so far is not looking very good with many deferring for the SR battery or AWD. Time will tell.
EldestOyster
Member
If you buy another Tesla, they will stay in business. 
That's what keeps businesses in business. I'm going to buy one this weekend. Together, we will can save the company!
Also, without Superchagers, I have a scheme where I plug it in in my garage and I'm good 95% of the time.
That's what keeps businesses in business. I'm going to buy one this weekend. Together, we will can save the company!Also, without Superchagers, I have a scheme where I plug it in in my garage and I'm good 95% of the time.
Jeff, Long story short, Tesla has zero chance to bankrupt. Nothing is 100% sure, but this one is close to 100%.
The hedge fund you talked about is a tiny fund with a short history. The fund manager is called John Thompson. In the past I read several letters he sent out. I think that guy doesn't really know what he is doing, worse than Mark Spiegel.
Why do I think Tesla can't bankrupt? To understand this, lets visit a company named USG. In 2008, during the recession, the company was on the verge of bankruptcy, at least shorts firmly believed. What they didn't understand is that business is not simple math. USG had debt and no business because of recession. On paper it should bankrupt. But suddenly it's top two shareholders decided to lend money to the company at a favorable rate. The stock has gained 10 fold since then.
Elon wrote a detailed Master Plan, Part Deux. I suggest you read it if you haven't done so. Elon talked about leading this company to become one of the largest in the world. It's not an empty dream, he has concrete steps to achieve it. If Tesla does become a trillion dollar company as Elon planed, his share in Tesla will worth around $300B. Elon doesn't need that amount of money for life enjoyment. He already has enough money for life. He wants the money to do things that's important for humanity. For this reason, Elon and his supporters will do everything to make it happen. Even if all things go wrong, Tesla can be sold for quite a lot of money. I estimate it would worth double today's market cap if it's for sale.
Why shorts are so sure Tesla will bankrupt? Many of them are not so bright, otherwise they wouldn't miss the big gain since IPO, and wouldn't have to struggle for all these years fighting against Tesla. Sitting on index would have made them a lot of money, but they don't understand it. Some shorts understand but they actively spread false information so they can benefit from a sharp drop.
Tesla will be able to ramp Model 3. There is nothing that's fundamentally impossible to solve. If the ramp is slower than planned, so be it, might need another billion. Elon alone can provide the cash. In the end Tesla will produce Model 3 at high speed and low cost. It's an amazing car, we all know it.
For investors who believe Elon and Tesla, the big question is where is the bottom? I can never predict the exact bottom. I think the best approach is to assume the bottom is yet to come, keep buying with free cash, don't use margin, don't leverage.
There are certain things that shorts can do to make it look scary. They can write scary articles; spread rumor; short the bond to drive up rate; buy credit default swap to make it look like everyone is worried about bankruptcy. By doing so, they hope Tesla will have difficulty to get additional cash, then they can create more fear. That's standard steps how shorts attack their targets.
I think majority of Tesla long-term investors are very intelligent, they will keep adding shares with cash. In the end the short attack will back fire.
Three words people: coast to coast. Not going bankrupt anytime soon. Though I do think somewhere Bob Lutz is getting his sado----mistresss in his role playing dungeon to get "punished"
strangecosmos
Non-Member
I think Tesla's cash "crunch" is being exaggerated.
At the rate of burn in Q3 2017, it has enough for about four more months — it will run out at the end of July.
Take the average of Q3 and Q4's burn rates: Tesla has enough cash to last until the end of 2018.
At the same time, Model 3 production appears to be ramping up fast. Bloomberg's model puts it at 1,000 cars/week currently, and on track to hit 2,000 cars/week in three weeks. As Model 3 deliveries increase in Q2 2018, cash burn will decrease from whatever it turns out to be in Q1 2018 (we don't know yet; last year the numbers for Q1 were reported on May 3rd). I'm trying to calculate the point at which Tesla becomes cash flow positive from Model 3 sales, but I don't have a number yet.
It's unlikely that Tesla would continue burning cash at the same rate as Q4 2017 until August because 1) a lot of that cash was spent on one-time costs of getting the Model 3 production system set up and 2) the ramp is happening and that improves cash flow.
Don't panic!
- Tesla’s cash balance at the end of Q3 2017: $3.53 billion
- Cash balance at the end of Q4 2017: $3.37 billion
- Cash burn during Q3 2017: $1.42 billion
- Cash burn during Q4 2017: $277 million
At the rate of burn in Q3 2017, it has enough for about four more months — it will run out at the end of July.
Take the average of Q3 and Q4's burn rates: Tesla has enough cash to last until the end of 2018.
At the same time, Model 3 production appears to be ramping up fast. Bloomberg's model puts it at 1,000 cars/week currently, and on track to hit 2,000 cars/week in three weeks. As Model 3 deliveries increase in Q2 2018, cash burn will decrease from whatever it turns out to be in Q1 2018 (we don't know yet; last year the numbers for Q1 were reported on May 3rd). I'm trying to calculate the point at which Tesla becomes cash flow positive from Model 3 sales, but I don't have a number yet.
It's unlikely that Tesla would continue burning cash at the same rate as Q4 2017 until August because 1) a lot of that cash was spent on one-time costs of getting the Model 3 production system set up and 2) the ramp is happening and that improves cash flow.
Don't panic!
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AZ Desert Driver
Rare combination
in my case (and I suspect many of the first wave of M3 reservation holdrs) I was very excied about getting a M3 and reserved during the reveal hysteria. Since then my excitment resulted in buying a MS, and I no longer need a M3. Does this mean my reservation was a fraud- a pumping of Tesla - a false indication of demand? True, I wont be buying two teslas,but my M3 reservation did result in buying an even more costly Tesla product. The sale conversion rate in my case--is not included in your tally, so perhaps you tally is not very reepresentative of Tesla health?
in my conversations with reservation holders most were hoping for a $25,000 Model 3. $35,000 less the tax credit, less state incentives. That car does not yet exist. None of them fully understood the FIT, instead thinking it could be applied at the time of purchase. We know that is incorrect just as the state incentives must be applied for after the purchase. None of the people I have met are able to afford an $800 per month auto expense including insurance. I suspect most will not have a $7,500 tax liability either. Sadly most of the facts were not fully understood until after people placed their reservations thanks to a press corp who also had few facts but continue to tout the "$35,000 Model 3". That probably accounts for many of the 63,000 cancellations as of last summer and many more since then.
There’s a lot of strong positions both ways. In my opinion it’s wrong to think its 100% certain they won’t go bust, any company spending a lot of cash is at risk, if the falling stock price due to global concerns over cobalt or other raw material linked to Russia, factors outside Teslas control, then that alone could cause problems compounding current difficulties.
Then we have the risk that Musk/Tesla do a Facebook and alienate a lot of people. The stock is now down to where it was in 2014 I think, that’s not really a strong return.
But then it’s also true that if Tesla got into trouble, the company is unlikely to disappear, Musk might go, free super charging might go, but something would happen. Few car companies disappear all together, Saab is one but primarily because GM let it fail and stopped it being bought by the Chinese.
Then we have the risk that Musk/Tesla do a Facebook and alienate a lot of people. The stock is now down to where it was in 2014 I think, that’s not really a strong return.
But then it’s also true that if Tesla got into trouble, the company is unlikely to disappear, Musk might go, free super charging might go, but something would happen. Few car companies disappear all together, Saab is one but primarily because GM let it fail and stopped it being bought by the Chinese.
Who would buy them and why? Price would have to be REALLY low and there would have to be actual viable path to profitability, which Tesla hasn't managed a single year of. They've racked up over $4.5 billion in net losses, including their few profitable quarters. Debt levels per their last SEC filing is past $10 billion.
Tesla - Annual Report says "As of December 31, 2017, we and our subsidiaries had outstanding $10.17 billion in aggregate principal amount of indebtedness (see Note 13, Convertible and Long-Term Debt Obligations, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K)..."
Companies don't like to throw good money after bad.
Now, if most/all of the debt were wiped out and what's left could be profitable.... Or, maybe you're thinking that the buyer would just scrap anything to do w/vehicle manufacturing and development and just be a servicing/support company for existing Teslas?
Everything this guy says comes from the balance sheet and income statement that have been out since February 7th.
It's been almost 2 months that you could have either refuted or agreed with his claim. Why are you even asking ?
It's been almost 2 months that you could have either refuted or agreed with his claim. Why are you even asking ?
My crystal ball says "ask again after Q1 earnings release".
On a related note, more bad news for Tesla/Elon: Tesla shareholders fighting SolarCity merger win a round in court
On a related note, more bad news for Tesla/Elon: Tesla shareholders fighting SolarCity merger win a round in court
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