2017 Investor Roundtable: TSLA Market Action

[ValueAnalyst]

Is that good, or bad, from an investor's perspective?

And why would they need to do that, given that they already have $3billion cash in the bank?

This is GREAT for equity investors!

This is slightly below the $2B of non-dilutive debt capital that I yesterday said Tesla should raise. As I also said yesterday, it would be idiotic for Tesla to raise equity capital if it can do what it just did. I repeat that Tesla will not need another equity raise, ever. Tesla will use the $3B existing cash for Model 3. This cash will be used to accelerate subsequent Gigafactory buildout - I know this is not what was said in the press release.

 

[Bgarret]

Is that good, or bad, from an investor's perspective?

And why would they need to do that, given that they already have $3billion cash in the bank?

Total speculation, but $1.5 Billion is about 1/3 of a gigafactory. If Tesla has Panasonic and 1 other partner (Tencent - China; WalMart - Semi....etc), then it may be a requirement to line up financing before any announcement, as the $3.0 million on Tesla's books is already assigned to current obligations (III, Gigafactory 1 & 2)

If there was a need for $1.5 Billion based on current operations and announced goals, I'm pretty confident they would have said something in the earnings call, quarterly report or 10Q - this smells like something new.

 

[MXWing]

Does this mean non convertible bonds?

 

[ValueAnalyst]

Total speculation, but $1.5 Billion is about 1/3 of a gigafactory. If Tesla has Panasonic and 1 other partner (Tencent - China; WalMart - Semi....etc), then it may be a requirement to line up financing before any announcement, as the $3.0 million on Tesla's books is already assigned to current obligations (III, Gigafactory 1 & 2)

If there was a need for $1.5 Billion based on current operations and announced goals, I'm pretty confident they would have said something in the earnings call, quarterly report or 10Q - this smells like something new.

I think about this differently.

Gigafactory costs are heavily weighted towards later years of construction, because the majority of the cost is tooling and equipment.

$1.5 Billion should be enough for initial phases of construction, starting in 4Q17 and through 2018, for four to five Gigafactories.

Tesla will be able to finance the rest with internal cash flow.

 

[ValueAnalyst]

Does this mean non convertible bonds?

I'm ~99% sure that it does.

 

[Bgarret]

I think about this differently.

Gigafactory costs are heavily weighted towards later years of construction, because the majority of the cost is tooling and equipment.

$1.5 Billion is enough for the initial phases of construction, starting in 4Q17 and through 2018, for four to five Gigafactories.

Tesla will be able to finance the rest with internal cash flow.

I don't necessarily disagree that this might be how it plays out, but if Tesla is going to partner - and at a minimum they will partner with Panasonic - a partner may require a dedicated line of credit obligated to the project, rather than risky future promises. If you and I were going to build a building together, I'm not relying solely on your promise of future income from your Seeking Alpha writings as your commitment to the project.

 

[ValueAnalyst]

I don't necessarily disagree that this might be how it plays out, but if Tesla is going to partner - and at a minimum they will partner with Panasonic - a partner may require a dedicated line of credit obligated to the project, rather than risky future promises. If you and I were going to build a building together, I'm not relying solely on your promise of future income from your Seeking Alpha writings as your commitment to the project.

Oh yea... even if the whole world clicked on my free articles, I couldn't build a condo, let alone a Gigafactory. Number of subscribers to my premium service has been increasing though, so give me another few months, and I'll be knocking on your door with my boring machine.

 

[MitchJi]

t's all supply and demand. I suspect the smart/large shorts know this (or know the players who are thinking of redeeming/converting) and play upon the excess shares that will likely be coming onto the market.

Where are the mythical "smart shorts" that are occasionally mentioned on this forum? Unicorns?

 

[bdy0627]

This is GREAT for equity investors!

This is slightly below the $2B of non-dilutive debt capital that I yesterday said Tesla should raise. As I also said yesterday, it would be idiotic for Tesla to raise equity capital if it can do what it just did. I repeat that Tesla will not need another equity raise, ever. Tesla will use the $3B existing cash for Model 3. This cash will be used to accelerate subsequent Gigafactory buildout - I know this is not what was said in the press release.

Expectation is that this will be spun negative, "burning even faster through cash", etc... Perhaps a small dip opportunity now? I would think this is unlikely to seriously stall the current stock trend. What do others think?

 

[ValueAnalyst]

Expectation is that this will be spun negative, "burning even faster through cash", etc... Perhaps a small dip opportunity now? I would think this is unlikely to seriously stall the current stock trend. What do others think?

I can't predict day-to-day moves, so I focus on the longer term. This is very positive for long-term investors, but you may be right that this may be spun negatively in the shorter term. I'll add if it goes lower than my last purchase price around $310-315.

 

[Chickenlittle]

Tesla Announces Proposed $1.5 Billion Offering of Senior Notes

Is anyone else suspicious that someone got up before 3am to release this? They are based in California and markets don't open for 6 1/2 hrs. Lots of fake news these days

 

[jeewee3000]

Is anyone else suspicious that someone got up before 3am to release this? They are based in California and markets don't open for 6 1/2 hrs. Lots of fake news these days

Are you implying that the official Tesla website is posting fake news??

 

[Lessmog]

Is anyone else suspicious that someone got up before 3am to release this? They are based in California and markets don't open for 6 1/2 hrs. Lots of fake news these days

Bots just arrived in Palo Alto?

 

[ValueAnalyst]

Is anyone else suspicious that someone got up before 3am to release this? They are based in California and markets don't open for 6 1/2 hrs. Lots of fake news these days

I'm pretty sure somebody doesn't just roll out of their bed and blast out an e-mail for a $1.5 billion capital raise.

 

[bdy0627]

This is GREAT for equity investors!

This is slightly below the $2B of non-dilutive debt capital that I yesterday said Tesla should raise. As I also said yesterday, it would be idiotic for Tesla to raise equity capital if it can do what it just did. I repeat that Tesla will not need another equity raise, ever. Tesla will use the $3B existing cash for Model 3. This cash will be used to accelerate subsequent Gigafactory buildout - I know this is not what was said in the press release.

Hopefully, this is a precursor to coming announcements regarding the additional gigafactories.

 

[TradingInvest]

Elon is a risk taker, but 2008 and 2012 changed his view toward cash position. Unexpected evens frequently happen. It's better to have extra cash reserve. If Tesla didn't issue this $1.5B bond, the cash position would drop to $1B by end of 2017, that's scary. This borrowing is first a derisk move, it's great. Elon already hinted it in the CC. If Model 3 goes smooth as expected, Tesla can get started with the new Gigafactories in a few months. 2018 will be a busy year.

 

[ValueAnalyst]

Elon is a risk taker, but 2008 and 2012 changed his view toward cash position. Unexpected evens frequently happen. It's better to have extra cash reserve. If Tesla didn't issue this $1.5B bond, the cash position would drop to $1B by end of 2017, that's scary. This borrowing is first a derisk move, it's great. Elon already hinted it in the CC. If Model 3 goes smooth as expected, Tesla can get started with the new Gigafactories in a few months. 2018 will be a busy year.

I don't think the bolded statement above was a foregone conclusion. We'll see at year-end if Cash and Cash Equivalents is below $2.5 billion.

Tesla has a lot of cash coming its way with additional Model 3 reservations, and cash from Model 3 orders.

Further, OpEx is guided flat in 2H17.

And I think Tesla is sandbagging with $2 billion capex need in 2H17.

All of these combined tells me Tesla's cash balance may never see below $3 billion.

 

[elasalle]

Is that good, or bad, from an investor's perspective?

And why would they need to do that, given that they already have $3billion cash in the bank?

On the earnings call, EM mentioned that it might make sense to have a cap raise not due to financial needs, but more as a cushion. I think he mentioned an example about earthquakes as to why it made sense to have the extra cash.

 

[kenliles]

Is anyone else suspicious that someone got up before 3am to release this? They are based in California and markets don't open for 6 1/2 hrs. Lots of fake news these days

Are you implying that the official Tesla website is posting fake news??

Bots just arrived in Palo Alto?

must be Russian Bonds-
oil embargo hedging--

 

[LargeHamCollider]

After much cheering for more debt yesterday from a number of posters, wish granted.