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Why is Tesla so insistent on hitting cash flow positivity without raising any additional capital? They're sitting on a $50+ billion market cap, it shouldn't be
by rory096 8y ago
Why is Tesla so insistent on hitting cash flow positivity without raising any additional capital?
They're sitting on a $50+ billion market cap, it shouldn't be that hard to raise. We're not even talking about increasing their debt load, since $1B of bonds are coming due. Why not just refinance them? Yes, they have a junk rating, but they've consistently borrowed at lower interest rates than comparable companies.
It seems driven by Elon Musk's hubris and insistence on proving shorts wrong rather than sound business strategy.
- spiderfarmer 8y agoI think it’s also because Tesla needs the positive press that comes with reaching their goals. A lot of investors are investing because they want the company to succeed and Tesla needs their trust, especially after missing so many deadlines.
- nopriorarrests 8y agoTesla stock price is $304 in today trading. If tesla will raise cash with stock dilution, the stock can go to $270-280 range. It was there in Sep 2014, meaning TSLA investors got almost nothing for 3 years straight while broader market roared and a lot of stocks doubled or tripled. This, in turn, may force institutional investors start selling, and since TSLA is very concentrated and free float is very small, it may cause serious price decline. And if you talk about cash raise with new bond offering, their 2025 bonds are trading with 7% yield. Not the most favorable terms, tbh.