Towards an Electric Vehicle Manufacturer Tesla (NASDAQ: TSLA) Fourth quarter next week, investors will be watching the company's liquidity footprint. Tesla's cash balance has not only narrowed from $ 3.4 billion at the end of the company's fourth quarter of 2017 to $ 3 billion in the third quarter of 2018, but Tesla is due a massive debt payment in March this year. Tesla's latest update said it will require significant effort and "some luck" to "make a tiny profit" in the first quarter, and shows why the company's money is such a hot topic.
However, Fox Business News, citing insider insiders on Thursday, said that Tesla believes it will have the cash to make this payment without raising funds.
High Debt Payments
"What I hear from Tesla is that … Corporate officials believe that they have enough money to make that payment ̵
While the unhedged senior notes could be converted into stock, the stock would need to trade close to $ 360 to get a swap. With the stock closing at $ 291.51 on Thursday, the stock would need to go up 23% to allow the bondholders to convert the debt into equities. Suffice to say that the Tesla shareholders do not count on a conversion.
Tesla added fuel to the fire and had to pay $ 230 million in debt last November, which management said in its third quarter shareholder letter It was planned to repay in cash during the quarter.
Gasparino admitted that his sources could be wrong and said he was not sure if the company completely ruled out the idea of a capital increase.
Cash Is Crucial
Due to the capital-intensive nature of Tesla business, cash flow and cash balance are particularly important to the business now. The automaker is in full swing with the production of its largest volume vehicle – the Model 3 – and expands the vehicle deliveries to Europe and Asia. In addition, Tesla intends to launch a lower-cost version of the Model 3, which will put the company's profit margin under pressure later this year.
Tesla's cash position has recently seen a boom as the company came to positive cash flow in the third quarter. This helped raise the company's cash position by $ 731 million from the second quarter of 2018. While the company expects positive cash flow in the fourth quarter, it is less certain what to expect from the first quarter. Tesla recently announced plans to lay off 7% of its workforce to cut costs, suggesting that the company is facing a cash crisis.
Investors will gain more insight into Tesla's current cash level and plans for debt payments, announcing its fourth-quarter results on Wednesday, January 30.