4 ms·

Assuming WSJ reporting is accurate, Musk's singular focus needs to be on Tesla's profitability. All his other stunts, from the boring company to Thai submarines

Assuming WSJ reporting is accurate, Musk's singular focus needs to be on Tesla's profitability. All his other stunts, from the boring company to Thai submarines need to take a hiatus until he gets Tesla out of this trouble

fouc 8y ago
I thought this provided some interesting background https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-sellers.118431/ https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-s...
- SmellyGeekBoy 8y ago
  This is absolutely fascinating, thanks for sharing.
- slivym 8y ago
  That is worth taking with a massive pinch of salt. A lot of the 'evidence' and points made in that post are like reading tea leaves. To give one example: > In March 2018, short interest spiked to a new all time high, to its current levels. This coincided with the Moody's downgrade, and sudden questions over liquidity. Just as Tesla's most important product is about to ramp. Reality check: Tesla's target for mass production was December 2017. In March the deadline had been completely missed. In Q4 2017 they pushed the target to Q1 2018 and in march they pushed the target further back to Q2 2018.[1] They were producing around 1000 cars per week at that point. In March news was also coming in that Musk had just been granted an outrageous set of stock options that were going to be conditional on Market Cap - not production targets or profitability.[2] Not to mention the fact that at that point the plan for hitting the target had turned into a plan to build a tent city for car production, which doesn't seem likely to fill investors with confidence. You can say NOW that production was about to ramp up - but did this author buy in in March because he knew better than everyone else that production was about to successfully ramp? So that's the context of the actual production capabilities of Tesla, and then the other context you need is that Tesla is burning through cash and has a load of debt (not helped by the huge debt that SolarCity bought in). This is a material risk, and in March Moody's downgraded Tesla - which increases the cost of their borrowing, which again is perfectly expected to reduce the value of the stock. Especially when you consider that they have over 1B in debt maturing in the next 12 months and that needs to be rolled over at a time it looked possible they STILL wouldn't be producing 5,000 cars a week. This is one extremely charitable narrative about a set of facts that without the charged topic probably indicate a company with serious, but not insurmountable, problems. [1]:https://www.barrons.com/articles/when-will-tesla-hit-its-elusive-model-3-production-target-1528409384 https://www.barrons.com/articles/when-will-tesla-hit-its-elu... [2]:http://business-review.eu/news/elon-musk-set-to-receive-usd-2-6-bn-in-shares-from-tesla-if-milestones-are-met-162528 http://business-review.eu/news/elon-musk-set-to-receive-usd-...
_pmf_ 8y ago
> All his other stunts, from the boring company to Thai submarines need to take a hiatus until he gets Tesla out of this trouble That's making the assumption that Musk's direct involvement in operational affair is a positive contribution to improving matters, which is increasingly becoming less probably given his erratic nature. He's needed as a mascot for the Believers, but apart from that, he should probably reduce his overnight stays in the factory.
whatok 8y ago
Why is this prefaced with a question of accuracy? Tesla verifies it in the article.
Animats 8y ago
Yes. Tesla's bond repayment schedule explains a lot. Tesla has some upcoming deadlines to pay back debt.[1] There's a hard deadline in November 2018; Tesla has to pay back Solar City's 5 year convertible notes. Forbes thinks Tesla can get past that one. The $920 million due in March 2019, though, is going to be tough. Tesla needs an extra billion in cash to get past that. This is why the frantic push to improve cash flow. [1] https://www.forbes.com/sites/chuckjones/2018/03/30/what-the-bond-market-is-telling-tesla-shareholders/#2558ca2555bd https://www.forbes.com/sites/chuckjones/2018/03/30/what-the-...

fouc 8y ago

I thought this provided some interesting background https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-sellers.118431/ https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-s...

SmellyGeekBoy 8y ago
This is absolutely fascinating, thanks for sharing.
slivym 8y ago
That is worth taking with a massive pinch of salt. A lot of the 'evidence' and points made in that post are like reading tea leaves. To give one example: > In March 2018, short interest spiked to a new all time high, to its current levels. This coincided with the Moody's downgrade, and sudden questions over liquidity. Just as Tesla's most important product is about to ramp. Reality check: Tesla's target for mass production was December 2017. In March the deadline had been completely missed. In Q4 2017 they pushed the target to Q1 2018 and in march they pushed the target further back to Q2 2018.[1] They were producing around 1000 cars per week at that point. In March news was also coming in that Musk had just been granted an outrageous set of stock options that were going to be conditional on Market Cap - not production targets or profitability.[2] Not to mention the fact that at that point the plan for hitting the target had turned into a plan to build a tent city for car production, which doesn't seem likely to fill investors with confidence. You can say NOW that production was about to ramp up - but did this author buy in in March because he knew better than everyone else that production was about to successfully ramp? So that's the context of the actual production capabilities of Tesla, and then the other context you need is that Tesla is burning through cash and has a load of debt (not helped by the huge debt that SolarCity bought in). This is a material risk, and in March Moody's downgraded Tesla - which increases the cost of their borrowing, which again is perfectly expected to reduce the value of the stock. Especially when you consider that they have over 1B in debt maturing in the next 12 months and that needs to be rolled over at a time it looked possible they STILL wouldn't be producing 5,000 cars a week. This is one extremely charitable narrative about a set of facts that without the charged topic probably indicate a company with serious, but not insurmountable, problems. [1]:https://www.barrons.com/articles/when-will-tesla-hit-its-elusive-model-3-production-target-1528409384 https://www.barrons.com/articles/when-will-tesla-hit-its-elu... [2]:http://business-review.eu/news/elon-musk-set-to-receive-usd-2-6-bn-in-shares-from-tesla-if-milestones-are-met-162528 http://business-review.eu/news/elon-musk-set-to-receive-usd-...

_pmf_ 8y ago

> All his other stunts, from the boring company to Thai submarines need to take a hiatus until he gets Tesla out of this trouble That's making the assumption that Musk's direct involvement in operational affair is a positive contribution to improving matters, which is increasingly becoming less probably given his erratic nature. He's needed as a mascot for the Believers, but apart from that, he should probably reduce his overnight stays in the factory.

whatok 8y ago

Why is this prefaced with a question of accuracy? Tesla verifies it in the article.

Animats 8y ago

Yes. Tesla's bond repayment schedule explains a lot. Tesla has some upcoming deadlines to pay back debt.[1] There's a hard deadline in November 2018; Tesla has to pay back Solar City's 5 year convertible notes. Forbes thinks Tesla can get past that one. The $920 million due in March 2019, though, is going to be tough. Tesla needs an extra billion in cash to get past that. This is why the frantic push to improve cash flow. [1] https://www.forbes.com/sites/chuckjones/2018/03/30/what-the-bond-market-is-telling-tesla-shareholders/#2558ca2555bd https://www.forbes.com/sites/chuckjones/2018/03/30/what-the-...