4 ms·

At around $1B negative cash flow a quarter, with a little over $3B in the bank, they _have_ to do this. I'm not a bond expert, but the debt markets seem tapped

At around $1B negative cash flow a quarter, with a little over $3B in the bank, they _have_ to do this. I'm not a bond expert, but the debt markets seem tapped out for them, and another stock offering wouldn't look so good either (but is likely). The skeptics should be saying, "what a coincidence that they project to achieve profitability _just_ before they go bankrupt."

Robotbeat 8y ago
Tapping out capital is a "Musk equilibrium." If there's too much runway, he considers it inefficient use of available capital and invests that extra available capital in some new project. He operates close to the edge intentionally. It's a risky strategy that could easily blow up in his face, but it has also paid off very well in the past. If they somehow had a bunch of extra cash in the bank right now, you'd find Musk simultaneously pushing hard on, say, Model Y right now, too.
- simonsarris 8y ago
  In other words, Elon Musk plays CEO like professional gamers play Starcraft. If you have resources, you should spend them. If you're flush with cash, you're losing.
  - adventured 8y ago
    Depending on how you want to view Musk's ambitions, he wants/needs to get Tesla big before the EV market is flooded with large scale competition and or he's looking to accelerate a switch to renewable energy and away from the murderous fossil fuel, gasoline burning nightmare we're currently living with. Regardless of what one believes about Musk, speed is critical here. Tesla needs to get very large if it's going to compete with GM, Ford, BMW, Mercedes, Toyota, etc. long term in EVs. They need a certain minimum scale to survive as a meaningful volume independent auto maker.
dmode 8y ago
I have no idea why people talk about Tesla going bankrupt. It will never happen in this liquid market. Even Uber raised $10bn from SoftBank. There is a ton of liquidity in the market and a lot of it is coming from middle East sovereign funds. It should be easy to do a stock sale with that kind of revenue and demand numbers.
- carlivar 8y ago
  Agreed, a dilution event like that seems more probable than bankruptcy. Though dilution has already been happening anyway. Just look at a graph of shares outstanding.
- rconti 8y ago
  As someone mulling buying a Model 3, I'm keeping an eye on their solvency. One thing that occurred to me is that, to expect a bankruptcy, you'd have to completely disregard the efficient market hypothesis. Sure, there are plenty of crazy fanboy retail investors out there, but there SHOULD be more than enough shorts if that's truly where the smart money was.
- snovv_crash 8y ago
  Not only that, but rich Arabs may want to hedge against a switch away from oil, and a company like Tesla is the perfect way to do that.

Robotbeat 8y ago

Tapping out capital is a "Musk equilibrium." If there's too much runway, he considers it inefficient use of available capital and invests that extra available capital in some new project. He operates close to the edge intentionally. It's a risky strategy that could easily blow up in his face, but it has also paid off very well in the past. If they somehow had a bunch of extra cash in the bank right now, you'd find Musk simultaneously pushing hard on, say, Model Y right now, too.

simonsarris 8y ago
In other words, Elon Musk plays CEO like professional gamers play Starcraft. If you have resources, you should spend them. If you're flush with cash, you're losing.
- adventured 8y ago
  Depending on how you want to view Musk's ambitions, he wants/needs to get Tesla big before the EV market is flooded with large scale competition and or he's looking to accelerate a switch to renewable energy and away from the murderous fossil fuel, gasoline burning nightmare we're currently living with. Regardless of what one believes about Musk, speed is critical here. Tesla needs to get very large if it's going to compete with GM, Ford, BMW, Mercedes, Toyota, etc. long term in EVs. They need a certain minimum scale to survive as a meaningful volume independent auto maker.

dmode 8y ago

I have no idea why people talk about Tesla going bankrupt. It will never happen in this liquid market. Even Uber raised $10bn from SoftBank. There is a ton of liquidity in the market and a lot of it is coming from middle East sovereign funds. It should be easy to do a stock sale with that kind of revenue and demand numbers.

carlivar 8y ago
Agreed, a dilution event like that seems more probable than bankruptcy. Though dilution has already been happening anyway. Just look at a graph of shares outstanding.
rconti 8y ago
As someone mulling buying a Model 3, I'm keeping an eye on their solvency. One thing that occurred to me is that, to expect a bankruptcy, you'd have to completely disregard the efficient market hypothesis. Sure, there are plenty of crazy fanboy retail investors out there, but there SHOULD be more than enough shorts if that's truly where the smart money was.
snovv_crash 8y ago
Not only that, but rich Arabs may want to hedge against a switch away from oil, and a company like Tesla is the perfect way to do that.