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Tesla has in excess of $11bn in debt; even if you could get the equity for nothing, an acquisition would still be extremely expensive - more than 25% of Ford's
by reitzensteinm 8y ago
Tesla has in excess of $11bn in debt; even if you could get the equity for nothing, an acquisition would still be extremely expensive - more than 25% of Ford's market cap.
I can't see a middle of the road outcome for Tesla; it'll either be wildly successful, or Musk will destroy it in the attempt.
- Roritharr 8y agoStill easily doable by Apple, if they only wanted to.
- nkozyra 8y agoDoable by a lot of companies if they wanted to, I think the suggestion was that someone in the domain would make the acquisition, which seems much tougher a prospect.
- morkfromork 8y agoLarry Ellison invested in TSLA. I would not want to see Oracle buy them.
- erichurkman 8y agoModel 3 suddenly cost $1,000 per wheel and come with a mandatory $40k/year support package, but don't worry, your rep got you a sweet 7.5% discount on future services — and he's never heard of a director approving such an incredible discount.
- qaq 8y agoHmm maybe TSLA should leverage Oracle for corp. fleet sales :)
- richardknop 8y agoDoable by companies like Apple/Google, the issue is why would they do it? Their shareholders would not approve such transaction as it's just throwing your money into a furnace.
- reitzensteinm 8y agoApple could do it, sure. I personally think they're the most likely candidate of any potential acquirer. But fundamentally, an acquisition of this nature is a simple build vs buy decision. In a situation where Tesla is ready to undergo a fire sale, its R&D will have already been cut to the bone. If Tesla stagnates technically, "build" becomes infinitely more attractive; you're no longer desperately chasing a moving target, you're simply replicating what is known to work. Companies that can do this (as opposed to original R&D) are a dime a dozen. If the company is still healthy, I just don't see who would have the means and motive to acquire it.
- thiago_fm 8y agoTesla is just alive because the crisis haven't arrived yet. As soon as a lot of investors hit the breaks, a lot of those companies will go away... or become profitable.
- gibolt 8y agoFord is in debt 154 billion as of 2017, with an unclear path to an electric future (other than Rivian's help). I'd be more worried about them making it in the next 5 years.
- hi5eyes 8y agoyou really think tesla has a better chance of surviving than ford in the next 5 years?
- reitzensteinm 8y agoBy what definition? The chance of bankruptcy over the next five years is undoubtedly higher for Tesla. I think you are grossly misrepresenting Ford's balance sheet: https://www.marketwatch.com/investing/stock/f/financials/balance-sheet https://www.marketwatch.com/investing/stock/f/financials/bal... Tesla is valued in large part based on the kind of math you'd commonly see applied to a VC backed company three orders of magnitude smaller; multiplying a large payoff value by a small chance of success. People are making a bet on it becoming a trillion dollar behemoth that snatches tons of market share from energy and automobile companies during the turbulent switch over to renewable energy. If you're confident in their execution, it's worth it to have Tesla swing for the fences chasing this vision even if there's a large chance of failure. Assuming of course you have diversified - I think you'd have to have a screw loose to go all in.
- treis 8y agoThis is wildly misleading. Ford's debt mostly comes from it's financing arm. The name of the game there is to borrow money at a low interest rate and lend it out at a high one. The more debt Ford has the more money its making.