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Yikes, desperate times require desperate measures I guess! Considering that a) these suppliers already gave Tesla a deal based on promised volume, and b) these

Yikes, desperate times require desperate measures I guess! Considering that a) these suppliers already gave Tesla a deal based on promised volume, and b) these suppliers also have stock holders to account to... this seems like a Hail Mary pass. Perhaps an indication that Tesla is in much worse shape than Elon would like us believe.

bhouston 8y ago
It is a public company, everyone knows what shape it is in.
- GW150914 8y ago
  Not necessarily... remember Enron?
  - dragontamer 8y ago
    Well, assuming everyone is following the law (and while Musk is eccentric... I don't see any reason to think that he's a criminal), we know what is going on inside of Tesla. Everyone knows the dates when Tesla's bonds are due. We all know Tesla has lost $300 million / quarter per quarter for the last few years. Etc. etc. etc. Its all public information and there doesn't seem to be any "cooking of the books" going on right now. In the case of Enron, it looked like a normal company but the executives were lying to the public. A few investors published articles noting that the numbers looked "off", which eventually prompted an investigation. Basically: if people lie, there's usually evidence in the numbers. Some numbers look wrong, certain things don't add up right, etc. etc. I've never heard of Tesla cooking the books.
KaoruAoiShiho 8y ago
If people have been following Tesla financials it's been clear that they're running out of money. Normally it's ok, everyone knows that Tesla is losing money and is not yet profitable. In 2018 running a money losing business for decades is totally expected and excusable if it's something as cool and fancy as electric cars. Tesla just needs to raise money from investors or the debt markets and there are plenty of people willing to toss more in the pit. However Elon kind of boxed himself in with some egoistical bs about promising not to raise any more money this year??? But why? Just freaking raise more money holy shit. As it is he's actually doing harm to the company and seeming actually desperate.
- rjdagost 8y ago
  There's a lot of speculation as to why Elon claimed to not want or need additional capital raises. Some people claim there is an ongoing, undisclosed SEC investigation which prohibits them from issuing more shares. Others claim that parts suppliers will cut off credit unless they can show a sustained profit. Others claim that Moody's and S&P will cut Tesla's credit rating to "effectively in default" if they can't show a sustained profit this year, which will trigger institutional investors to dump their holdings. I have a feeling we will find out the real reason before too long.
  - Hypx 8y ago
    The answer might seriously be D) All of the above.
  - nradov 8y ago
    Credit rating agencies don't operate that way. They won't label a company as "effectively in default" unless a default is imminent and unavoidable. Credit ratings are based on ability to pay, not profitability. Tesla is in a precarious situation but far from actual default.
    - skgoa 8y ago
      Tesla is within 9 months of default, if things don't change dramatically. That's because in 9 month $900 million worth of bonds will have matured, which Tesla seems unable to refinance unless they raise capital, which Tesla seems unable to do for an unknown reason. Ratings agencies have highlighted this for a while now and have said explicitely that Tesla will have to show sustained, profitable production or their rating will be reduced to "practically junk". The situation is not quite at that stage yet, but it's not as far off as you make it seem, either.
      - nradov 8y ago
        Sure that's all correct and I expect Tesla will have to raise more funds to survive. But from a credit rating standpoint there's a huge difference between "effectively in default" and "practically junk". Many companies issue junk bonds and are able to continue operating.

bhouston 8y ago

It is a public company, everyone knows what shape it is in.

GW150914 8y ago
Not necessarily... remember Enron?
- dragontamer 8y ago
  Well, assuming everyone is following the law (and while Musk is eccentric... I don't see any reason to think that he's a criminal), we know what is going on inside of Tesla. Everyone knows the dates when Tesla's bonds are due. We all know Tesla has lost $300 million / quarter per quarter for the last few years. Etc. etc. etc. Its all public information and there doesn't seem to be any "cooking of the books" going on right now. In the case of Enron, it looked like a normal company but the executives were lying to the public. A few investors published articles noting that the numbers looked "off", which eventually prompted an investigation. Basically: if people lie, there's usually evidence in the numbers. Some numbers look wrong, certain things don't add up right, etc. etc. I've never heard of Tesla cooking the books.

KaoruAoiShiho 8y ago

If people have been following Tesla financials it's been clear that they're running out of money. Normally it's ok, everyone knows that Tesla is losing money and is not yet profitable. In 2018 running a money losing business for decades is totally expected and excusable if it's something as cool and fancy as electric cars. Tesla just needs to raise money from investors or the debt markets and there are plenty of people willing to toss more in the pit. However Elon kind of boxed himself in with some egoistical bs about promising not to raise any more money this year??? But why? Just freaking raise more money holy shit. As it is he's actually doing harm to the company and seeming actually desperate.

rjdagost 8y ago
There's a lot of speculation as to why Elon claimed to not want or need additional capital raises. Some people claim there is an ongoing, undisclosed SEC investigation which prohibits them from issuing more shares. Others claim that parts suppliers will cut off credit unless they can show a sustained profit. Others claim that Moody's and S&P will cut Tesla's credit rating to "effectively in default" if they can't show a sustained profit this year, which will trigger institutional investors to dump their holdings. I have a feeling we will find out the real reason before too long.
- Hypx 8y ago
  The answer might seriously be D) All of the above.
- nradov 8y ago
  Credit rating agencies don't operate that way. They won't label a company as "effectively in default" unless a default is imminent and unavoidable. Credit ratings are based on ability to pay, not profitability. Tesla is in a precarious situation but far from actual default.
  - skgoa 8y ago
    Tesla is within 9 months of default, if things don't change dramatically. That's because in 9 month $900 million worth of bonds will have matured, which Tesla seems unable to refinance unless they raise capital, which Tesla seems unable to do for an unknown reason. Ratings agencies have highlighted this for a while now and have said explicitely that Tesla will have to show sustained, profitable production or their rating will be reduced to "practically junk". The situation is not quite at that stage yet, but it's not as far off as you make it seem, either.
    - nradov 8y ago
      Sure that's all correct and I expect Tesla will have to raise more funds to survive. But from a credit rating standpoint there's a huge difference between "effectively in default" and "practically junk". Many companies issue junk bonds and are able to continue operating.