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I feel like the way that the press reports on corporate earnings in general is in bad need of an overhaul. There is a lot of talk in here about "rare" profits a
by jsight 8y ago
I feel like the way that the press reports on corporate earnings in general is in bad need of an overhaul. There is a lot of talk in here about "rare" profits and the needs for financing, but little about why that might be the case.
Does the reporter genuinely believe that a business like Tesla could be built without doing those things? If you had to recreate Tesla from scratch tomorrow, how much would it cost? And wouldn't you have even bigger loans and debt than the business does?
There is just so much context that is not merely left out, but replaced with confusion.
- jacques_chester 8y agoI don't think anyone objects to Tesla taking on debt to finance its growth. The thing is that if your debts are falling due and you don't have enough cash to pay them, you will need to borrow money, sell shares or renegotiate the debts. Your only other option is bankruptcy. Elon Musk nailed his colours to the mast earlier in the year by saying Tesla would not take on any new debt in 2018. And issuing shares has gotten a bit less simple since his "taking Tesla private" tweet. Which leaves renegotiation or bankruptcy. It remains to be seen whether creditors will renegotiate to avoid the hassle of bankruptcy and the possibility of significant upside through some kind of debt/equity deal. Or whether they will look at the $10Bn of PPE on the assets side of the balance sheet and say "well we can probably get $5Bn for that in a firesale to Toyota, Ford or GM and come out ahead".