The report pointed out that there are many reasons why Tesla’s magical connection with the capital market quickly fades. The first is that the burning of money is too fast. Tesla still had 3.4 billion U.S. dollars in cash and equivalent funds before the end of the year, and in February With the additional funds of 550 million U.S. dollars raised by lease payments, not all of the money can be used for expenditures. Most of the refundable customer deposits are 850 million U.S. dollars.
Tesla burned more than $3.4 billion in free cash last year, and free cash was defined as operating cash flow minus capital expenditure. If the speed remains unchanged, Tesla will exhaust its available cash before the end of this year. Worse is that There is reason to believe that free cash burning data is underestimated.
Tesla’s free cash flow has been falling sharply. Forbes quoted one critic as saying that Tesla was in a “structural bankruptcy” state, representing that the company was unable to maintain its operations and could not have no capital. Continuing operations in the market situation. In fact, Tesla as a listed company to raise a lot of funds, over time, will certainly need more funds.
The increase in Tesla’s capital is predictable because young companies in capital-intensive companies must invest heavily at the outset, and investments at the same time bring rapid income growth, just as Tesla’s performance in the past. If a young company Good at managing costs, then investment growth will be slower than income, so profits will grow rapidly. Eventually the large investment period begins to slow down and profits exceed spending. But Tesla is now structurally bankrupt and has to use capital markets to maintain operations.
If Tesla can't reach the productivity of 2,500 Model 3 per week at the end of the first quarter, the troubles are still behind. The Wall Street Journal reported that the production problem is only part of the Model 3 problem. The demand for this vehicle is actually worse than that of Elon Musk. Promise to be so high. Bernstein analysts estimate that fewer than 30% of the customers who were invited to order Model 3 placed orders.
If you want to increase production, Tesla cannot solve the cash challenge by simply cutting spending. Tesla has accumulated about 10 billion U.S. dollars of long-term debt and total liabilities of 23 billion U.S. dollars. The report believes that in order to survive, Tesla needs Stop over-commitment, reduce ambition, and come up with real achievable goals. However, the most urgent thing now is money.
Taking into account the current bondholders' losses, issuing more bonds is not a practical solution, but fundraising is not impossible, but the recent trend of the entire technology stocks will not help, plus the Model 3 has been proved not as old as fantasy. It's so attractive. Tesla's financing may be in trouble. If the delivery of Model 3 is worse than expected next week, then this year's crisis is likely to continue.