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TSLA Confirms Cash Burn Fears, Sells $500 Million In Stock

Tyler Durden's picture




 

Over the weekend, when looking carefully at Tesla's cash burn, pardon cash inferno...

 

... we said that at "the current cash burn rate, TSLA can only fund just two more quarters of cash burn at which point, and most likely well before it, the company will have to aggressively raise new capital."

It wasn't 1-2 quarters. It was barely 3 days. Moments ago TSLA announced that, just as we expected, it would dilute its shareholder by just under 2% by issuing $500 million in equity. From the press release:

Tesla announced today that it intends to offer, subject to market and other conditions, $500 million of additional shares of common stock in an underwritten registered public offering. In addition, Tesla intends to grant the underwriters a 30-day option to purchase up to $75 million of additional shares of common stock.

 

Elon Musk, Tesla's CEO, intends to purchase $20 million of common stock in this offering at the public offering price.

One wonders if the entire $20 million "out of Elon's pocket" was once again funded by $20 million out of California taxpayers' pockets.

Tesla intends to use the net proceeds from this offering to accelerate the growth of its business in the United States and internationally, including the growth of its stores, service centers, Supercharger network and the Tesla Energy business, and for the development and production of Model 3, the development of the Tesla Gigafactory, and other general corporate purposes.

In other words, at the current burn rate, TSLA just bought itself one more quarter of cash flow. Expect another equity offering in the next 1-2 quarters.

And if there is a reason why Morgan Stanley did not upgrade the stock with a $320 price target yesterday as it did back in 2014 the day before it issued a convertible offering for TSLA, is that this time the lead left is Goldman, not MS:

Goldman, Sachs & Co. and Morgan Stanley are acting as lead joint book-running managers for the offering, J.P. Morgan and Deutsche Bank Securities are acting as additional book-running managers for the offering, and BofA Merrill Lynch and Wells Fargo Securities are acting as co-managers.

And since this is the new paranormal, a $500 million dilution of the $30 billion market cap company promptly pushed its market cap higher... by $500 million, confirming yet again that to algos a GAAP equity offering is really just a non-GAAP buyback.

 

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Thu, 08/13/2015 - 07:31 | 6421558 buzzsaw99
buzzsaw99's picture

<-- fidelity will buy that shit

<-- don't worry about elon, he got plenty.

Thu, 08/13/2015 - 09:07 | 6421795 Antifaschistische
Antifaschistische's picture

"accelerating growth"  lol....this is nothing other than counterfeiting (i.e. liquidating the equity of current stockholders)

Thu, 08/13/2015 - 09:39 | 6421911 Pool Shark
Pool Shark's picture

 

 

Oh, by the way: You thought that charging your Tesla was FREE?

http://learnbonds.com/122496/tesla-motors-inc-tsla-charge-cheaters-targeted-by-messy-email-campaign/

Guess again; Elon's watching you...

(I love all those smug Tesla owners; turns out their just a bunch of greedy coal-burning cheaters...)

 

Thu, 08/13/2015 - 14:05 | 6422908 Sokhmate
Sokhmate's picture

TSLA suffers from externality trap: The Externality Trap, or, How Progress Commits Suicid. http://thearchdruidreport.blogspot.com/2015/02/the-externality-trap-or-h...

Thu, 08/13/2015 - 07:26 | 6421560 eucalyptus
eucalyptus's picture

O/T but Bloomberg telling the truth for once:

 

http://www.bloomberg.com/news/articles/2015-08-13/the-fed-is-on-thinner-...

 

 

Thu, 08/13/2015 - 07:28 | 6421564 unrulian
unrulian's picture

OT, for the one of you that had a boating accident in the wrong lake: http://www.msn.com/en-ca/news/offbeat/teen-finds-gold-bar-while-swimming-in-german-alpine-lake/ar-BBlGf4w

Thu, 08/13/2015 - 07:57 | 6421602 StackShinyStuff
StackShinyStuff's picture

Couple of funny things about that pic.  Says USSA on the bar and the bottom half is scratched off as if someone was looking for Tungsten.  Confirms it was not the one I lost...

Thu, 08/13/2015 - 09:08 | 6421798 Boozer
Boozer's picture

Why on earth hand it over to the police?  Good luck getting it back.

Thu, 08/13/2015 - 07:32 | 6421571 buzzsaw99
buzzsaw99's picture

the article is bullshit wall street propaganda as the fed has no intention of raising rates.

Thu, 08/13/2015 - 07:41 | 6421581 negative rates
negative rates's picture

And if you like your bullshit wall street propaganda, you can KEEP your bullshit wall street propaganda.

Thu, 08/13/2015 - 07:58 | 6421603 eucalyptus
eucalyptus's picture

I read it more as the fed has painted itself in a corner and is fucked.

Thu, 08/13/2015 - 08:09 | 6421628 buzzsaw99
buzzsaw99's picture

the fed gangsters and billionaires are getting richer by leaps and bounds so how exactly are they fucked?

Thu, 08/13/2015 - 07:27 | 6421561 juicy_bananas
juicy_bananas's picture

Tesla is the new DeLorean bitchez

Thu, 08/13/2015 - 07:30 | 6421569 Headbanger
Headbanger's picture

Moar like Bricklin dude

Thu, 08/13/2015 - 07:57 | 6421599 NoDebt
NoDebt's picture

Elon Musk was recently reported as saying "When this baby hits 88 miles per hour, you're gonna see some serious shit."

Thu, 08/13/2015 - 12:28 | 6422507 Dawgeatdog
Dawgeatdog's picture

Complete with a kilo of coke in the trunk?  With the price of a Tesla, it might take 3 kilos to make it worthwhile.   Inflation

Thu, 08/13/2015 - 07:29 | 6421566 overmedicatedun...
overmedicatedundersexed's picture

genius, elon deserves every penny..why can't us ave joe's running small business just issue stock on zirp debt and grow our business..well "cause it's a big club and you and I are not in it"..who gets the money? well it don't hurt if you are a jew, now does it?

Thu, 08/13/2015 - 07:39 | 6421577 Infinite QE
Infinite QE's picture

He's not a jew though. Too interested in actually making things, not thieving, to be one.

Thu, 08/13/2015 - 14:18 | 6422959 IronForge
IronForge's picture

Check Again.

Thu, 08/13/2015 - 07:33 | 6421573 wmbz
wmbz's picture

One wonders if the entire $20 million "out of Elon's pocket" was once again funded by $20 million out of California taxpayers' pockets.

 

Well since it came from the happy taxpayer into his pocket in the first place, he certainly won't feel any pain.

Living off the taxpayer is the Amerikan way!

Failure is not fair!

Thu, 08/13/2015 - 07:37 | 6421575 ToSoft4Truth
ToSoft4Truth's picture

Tesla has the right product. We know this because most state governments are blocking direct Tesla sales.    

States keep us safe from new products.

Thu, 08/13/2015 - 07:37 | 6421576 FJ
FJ's picture

Stock buybacks in the next quarter...yesss

Thu, 08/13/2015 - 07:42 | 6421582 nmewn
nmewn's picture

MOre SuBSidies oR the shareholder GeTs iT! !!....lmao.

Thu, 08/13/2015 - 07:48 | 6421587 Anopheles
Anopheles's picture

So, Tesla has half the market cap of Ford? but Ford sells 200 times as many cars?   And Tesla has only ever made a tiny profit 3 quarters?  A couple hundred million dollars of their revenue is from carbon credits and zero emission vehicle credits? 

Tesla depends on government handouts while trying to sell $100k cars? 

What's wrong with this picture

Thu, 08/13/2015 - 07:56 | 6421596 waterwitch
waterwitch's picture

Ford, GM, and Chrysler have all had their share of gov handouts.  Would GM exist today had they not been bailed out?  Don't think so.

Now, how will the auto companies fair when the auto subprime market implodes???

Thu, 08/13/2015 - 08:16 | 6421643 Chump
Chump's picture

Demand for cars is not going anywhere.  GM and Chrysler should have been allowed to fail (or recover, we don't know how that hypothetical would play out).  Let someone else try to profit in the auto industry if they can't cut it.

There is negligible demand for electric cars.  Tesla would not exist at all without constant government support, and I doubt anyone would attempt to even enter their market without that same support.

In both scenarios, if you can't operate your business without forcing people to invest using the government's guns as a threat, you are not in business.  You are a racketeer, scum of the earth, nothing more than a common criminal pretending to have a big brain.

Thu, 08/13/2015 - 08:43 | 6421714 Infinite QE
Infinite QE's picture

The only market for American made cars are:

1. Government

2. Rental/leasing entities

3. Rednecks who still have the buy America defect. Not aware that none of these cars are really made in America as they are all globalist nightmare pieces of crap designed to only last through the warranty period.

Thu, 08/13/2015 - 08:53 | 6421755 venturen
venturen's picture

Obama annouces all government employees get a tesla...in addition to their own car... Nothing is too good for a government workers 

Thu, 08/13/2015 - 10:28 | 6422015 Anopheles
Anopheles's picture

The difference is Ford, GM and Chrysler didn't START their business based on gov handouts, and never DEPENDED on handouts as their business strategy.

Do you think government handouts for Tesla will last forever?  If electric cars become more common, do you think the governments will continue their tax free status and rebates?

Governments lose $500 to $2000 a YEAR in gasoline taxes for every electric car.   If there are millions of electric cars on the road, do you think governments will CONTINUE to ignore that drop in tax revenue? 

When governments support Ford, GM and Chrysler, they KNOW they will get $500 to $1000 a year back in gasoline taxes.   They get ZERO back from Tesla. 

The big 3 employ hundreds of thousands (million) workers.  Tesla has made a point of telling everyone they are extremely automated, eliminating as many jobs as possible.    Do robots vote? 

 

Thu, 08/13/2015 - 12:59 | 6422632 tangent
tangent's picture

Right, when the US nuked and otherwise demolished competition to the big three in Germany, that wasn't really a subsidy.

Thu, 08/13/2015 - 08:53 | 6421590 juicy_bananas
juicy_bananas's picture

-High priced entry barrier

-Not economical or practical for average buyer

-Zero after market for spare parts

-Unproven technology

-Battery powered car is pretty much useless in cold environments

-No widespread infrastructure of recharging stations

-Terrible investment due to company maybe not even being around in next decade

Keep drinking the Musk kool-aid. Just wish my tax dollars weren't subsidizing this monster.

Thu, 08/13/2015 - 07:54 | 6421594 Rocco the stiff
Rocco the stiff's picture

Who would buy a Tesla S, if you can have an M5 for that money.......like seriously..../facepalm

Thu, 08/13/2015 - 08:08 | 6421622 Infinite QE
Infinite QE's picture

Quicker 0-60. Better build quality.

Thu, 08/13/2015 - 09:54 | 6421951 Max Cynical
Max Cynical's picture

A friend bought a Tesla 3 years ago. The cost was $110K plus another $2,500 to install the home charging station. Now he's looking at the P85D for $120K+. Tesla offered him $50K for his trade in, so he's burning through $1,700/month ($55/day) in depreciation alone.

Performance and build quality are great. And he's able to drive in the carpool lane (which is a big deal in LA/OC).

But for me, I can't stomach that kind of depreciation.

There's plenty of other cars out there for 1/3 the price with respectable performance and as good or better build quality.

It's just a high tech status symbol.

Thu, 08/13/2015 - 14:22 | 6422980 IronForge
IronForge's picture

Max,

If your're interested, you might be able to lease a HFCV or a NGV; and probably (check closely) be able to ride the HOV Lanes.

Thu, 08/13/2015 - 07:57 | 6421600 Grandad Grumps
Grandad Grumps's picture

What could incentivize me to buy an electric car?

1. Low overall cost, initial price is not the only item, but is also important. For me, the initial price point would have to be in the $30k to $60k range.
2. I could fuel/charge it at home
3. It is a car that I want to drive and use in the way I currently use a car
4. No explosion of other hazard from using it. It would need to meet safety standards.

My guess is that other people think as I do. Tesla will be a loser until they are able to produce a "normal +" car. Right not they have an expensive oddity. And, until they get to that point, everything they do will be simply sunk costs.

Thu, 08/13/2015 - 07:59 | 6421605 monad
monad's picture

Welcome to fantasy island. Mai naim hiss Elon Musk. I will be your host.

Thu, 08/13/2015 - 08:05 | 6421617 Jersey_Mountaineer
Jersey_Mountaineer's picture

"Hi, I'm an electric car... I don't go very fast, or very far.  And if you drive me, people will think you're gay!"

Thu, 08/13/2015 - 08:06 | 6421620 Charming Anarchist
Charming Anarchist's picture

Never trust a man who peddles "space" technology. 

Thu, 08/13/2015 - 08:37 | 6421701 juicy_bananas
juicy_bananas's picture

Elon's newest marketing ad. . .

https://www.youtube.com/watch?v=AqSZhwu1Rwo

Thu, 08/13/2015 - 08:15 | 6421626 Monetas
Monetas's picture

Bad name .... call it the Vulva .... more appeal .... and honors the Father of Electricity .... Thomas Alva Edison ?  edit - Edison is Eddy"s son , Nick"s son is Nixon - putting a human face on Capitalism !

Thu, 08/13/2015 - 08:28 | 6421664 MaxMax
MaxMax's picture

Tesla's Problems:

A: Their cars are OK, but not at $100K.  Feels more like a $40K car when you get in one.

B: How many people have $100K to burn on a car?  By the time you get to that price point, the number of potential buyers is few.

C:  Even if their cars were selling, if you have two cars on your block and you both try to charge them at the same time, you will blow the transformers on the power poles.  Little unknown fact: our power grid can't handle too many electric cars.

D:  Even at that price point, they are still losing money on the cars.

E:  There is a Tesla showroom that I see on my drive to work.  I watched the lot get filled with cars during the summer.  It was obvious, the cars weren't selling.  Oddly, last week, 1/2 the cars disappeared from the lot in one day.  Maybe trucked to a new showroom.

I wish them the best of luck (as long as there are no taxpayer subsidies), but I doubt they will make it.

Thu, 08/13/2015 - 08:30 | 6421673 orangegeek
orangegeek's picture

It is truly sad to see the name of Nikola Tesla, one of the greatest inventors of his time, associated with this pile of shit created by Elon fucking Musk.

 

Use your own name on your self created crap  you fucking asshole  musk!!!

 

Hope you get fit with concrete shoes very soon musk you fucking con-artist.

Thu, 08/13/2015 - 08:51 | 6421745 22winmag
22winmag's picture

I second the notion!

Thu, 08/13/2015 - 08:33 | 6421682 CHC
CHC's picture

PT Barnum would be so very proud of this little man called Elon Musk. 

Thu, 08/13/2015 - 08:50 | 6421738 Manipulism
Manipulism's picture

The musk gland is found only in adult males. It lies in a sac located between the genitals and the umbilicus, and its secretions are most likely used to attract mates.

 

 

Thu, 08/13/2015 - 08:58 | 6421774 who cares
who cares's picture

It is amazing how such a failed product can be kept alive for so long. only in a bubble economy based on cheap fiat money this can happen. Unfortunately the more we go forward in this fashion the higher the price will have to be payd...

Thu, 08/13/2015 - 09:14 | 6421823 chomu
chomu's picture

If Musk can sell shares at this valuation, why the hell not do it?..I would. I doubt sharesholders will ever be repayed via divs or buybacks.

The next recession will be the dagger in the heart of TSLA

I'd rather burn dead dinosuars in a new ZO6

 

chomu

Thu, 08/13/2015 - 10:14 | 6421999 quintago
quintago's picture

Z06? Thats a dbag car.

Thu, 08/13/2015 - 11:38 | 6422309 DeProgrammed
DeProgrammed's picture

Second only to the newest V8 Mustangs... the Holy Grail of the shirtless, full sleeve tattoo, flat brim, MMA wannabe dbags. Just got cut off by one this morning.

Thu, 08/13/2015 - 09:35 | 6421901 Jersey_Mountaineer
Jersey_Mountaineer's picture

When you can't sell cars, sell yourself. Tesla's resorting to prostitution.

Thu, 08/13/2015 - 09:44 | 6421925 nakki
nakki's picture

Sounds like they'll need another "secondary" offer in November. Old man winter is just around the corner and don't forget Gigafactory.

Thu, 08/13/2015 - 10:02 | 6421968 Mr. Guts
Mr. Guts's picture

I'm proud to support our coal industry.

Thu, 08/13/2015 - 10:25 | 6422032 GERxit
GERxit's picture

electric cars are so evironmentally friendly to produce, you gotta subsidise these great guys

Thu, 08/13/2015 - 10:48 | 6422114 Trucker Glock
Trucker Glock's picture

TSLA Confirms Automobile Burn Fears

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