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Home / Business / Tesla's "Settlement Day" is close as his incoming stock raises risk

Tesla's "Settlement Day" is close as his incoming stock raises risk



Tesla's large share decline this month will have a negative impact on his ability to raise much needed funds, according to Wall Street analysts.

Jonas said The company needs to accelerate its production rate for the Model 3 if it wants to raise funds at an attractive price for the company.

"The exact time when Tesla can reach a production of 2,500 / week and then 5,000 / week rate for its mass-market sedan may make the difference whether Tesla potentially capitalizes from a position of weakness to a price nearby or raising capital from a position of strength with a stock price near our $ 561

bull case, "he wrote.

Another financial firm is already pessimistic about Telsa's Model 3 production capacity.

Moody's downgrades Tesla's credit ratings after closing Tuesday and changed the outlook to negative from stable, citing the "significant downside" in the Model 3 production rate and its tense financial situation.

Tesla had cash and cash equivalents of $ 3.4 billion at the end of 2017. The company lost nearly $ 2 billion last year and burned around $ 3.4 billion after capital investment

Given the company's cash burn rate and the fact that by November 2018, $ 230 million and in March 2019, another $ 920 million is due, Moody's believes the company will soon need to raise new capital.

Tesla "faces liquidity pressures due to high negative free cash flow and floating convertible maturities," Moody's statement said Tuesday. "The negative outlook reflects the likelihood that Tesla will have to make a large, short-term capital increase to repay maturity obligations and avoid a liquidity bottleneck."

Some investors bet on their financial liquidity on Tesla problems and cash-burn problems

"The losses and high investments are expected to continue this year." In the next twelve months, Tesla will also $ 1.2 billion due, "wrote Fred Hickey, editor of High Tech Strategist in an email Wednesday. "In other words, Tesla has a tremendous need for more cash and some are starting to lose confidence in the company, as evidenced by the recent downgrade of Moody's debt and the strong sell-off in Tesla bonds

Hickey owns Tesla put options.

A hedge fund manager believes that Tesla's business model is permanently broken.

"Tesla is a financially unprofitable business. It has an upside down record. Billions of cash are massive and there is no end in sight, "wrote Gabe Hoffman of Accipiter Capital on Wednesday in an email." The financial need for Tesla to spend huge amounts of new capital has been apparent for some time. "

Hoffman cited the recent retirements of Tesla executives like his chief accountant in early March.

"This is an incredibly sinister sign that I believe confirms my thesis," he wrote. "Tesla is the largest short position in our fund. We have not covered a single share of this decline. "

Tesla did not respond to a request for comment.


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