By on May 2, 2019

Financial Twitter and Tesla Twitter — groups that are often one and the same — are in hardcore prediction mode after Tesla announced plans to raise $2 billion through the sale of stock and convertible bonds.

The automaker’s move comes after a first-quarter earnings report showed a steep drop in deliveries and automotive revenue, plus a $702 million net loss. Tesla’s cash pile dwindled, quarter over quarter, to $2.2 billion — its smallest stack in years. Among those snapping up shares will be CEO Elon Musk, who promises to buy $10 million in common stock.

It’s a U-turn from last year’s repeated promises that Tesla would not need to raise cash via stock offerings or debt. Of course, things can turn on a dime at Tesla. Earlier this year, Musk expressed confidence that the two consecutive profitable quarters that ended 2018 could continue into the future.

After last quarter’s earnings report, he changed his tune, stating that Q2 isn’t likely to see black ink.

The shelf offering announced Thursday includes “$650 million of common stock and $1,350 million aggregate principal amount of convertible senior notes due in 2024 in concurrent underwritten registered public offerings,” Tesla stated, adding, “In addition, Tesla has granted the underwriters a 30-day option to purchase up to an additional 15% of each offering.”

While the announcement prompted a slight boost in Tesla’s stock in after-hours trading, the company’s once sky-high valuation is a thing of the past. With a share price of $243.44 at last check, Tesla’s stock has declined roughly 30 percent since the beginning of the year.

In an earnings call last week, Musk said there was “merit” in raising capital.

Speaking to Bloomberg on Wednesday, Dan Ives, analyst at Wedbush Securities, said, “Musk and Tesla looked in the mirror and realized they needed to change their tune a little on the capital raise because the math doesn’t lie. Based on the profitability trajectory and what we saw in the first quarter, the writing is on the wall.”

At present, Tesla finds itself in the midst of construction of a Shanghai vehicle and battery plant (funded through local debt) and in the early stages of preparing for production of the Model Y, a crossover due out late next year.

[Image: Tesla]

Get the latest TTAC e-Newsletter!

26 Comments on “Tesla Embarks on Cash Hunt, Seeks to Raise $2 Billion...”


  • avatar
    indi500fan

    Some of this will go to finance their new exercise bike Peloton competitor which will charge your Powerwall to supply your home and Tesla car.

  • avatar
    EBFlex

    Musk is such a lying fraud.

  • avatar
    ToddAtlasF1

    Tesla is going to be the Value America to someone else’s Amazon, assuming EVs don’t go back to the scrapheap of history where they belong.

  • avatar
    Hummer

    They could easily raise $2 billion by selling products consumers desire at prices consumers can bear.

    LT1 powered model S, 3, and X would do well if priced appropriately.

  • avatar
    SCE to AUX

    What was said: “Musk said there was “merit” in raising capital”

    Reality: Musk said there was “survival” in raising capital

  • avatar
    Asdf

    Tesla should drop the plans to raise capital, and shut down its operations. Even after more than fifteen years, Tesla has not managed to make a single competitive car. Not a single one! It’s a complete disgrace that Tesla’s vehicles 2019 take longer to charge than the time it takes to fill a gas tank, and even then does not have a range that is as good as an ICE-powered car. As if that’s not bad enough, Tesla’s cars are ridiculously expensive, and often sponsored by the government (that’s honest, hard-working people’s tax money at work…), which is immoral.

    Tesla is an incompetent automaker, which has proven that it’s not viable, and it’s about time Elon Musk admits this and shuts it down. Elon Musk’s only lasting achievement with Tesla is proving beyond any doubt that BEVs are not viable.

    • 0 avatar
      NN

      Raising capital is normal for any business, especially one in rapid growth. Amazon similarly went many many years in the red. I don’t understand the hatred for an American company that in 15 years has gone from nothing to the most advanced common vehicles on the road, and quickly becoming an export powerhouse. It’s the only brand really holding back a wave of Chinese domination of the EV market. We will not run on gas cars much longer, electric will ultimately win, it is more efficient and cleaner on a grand scale and there is no reasonable argument about that. The growth rate worldwide on electric cars is explosive, and Tesla is the only American company really competing–and they’re the world’s best.

      If you think any other competitor is better (Audi E-Tron, Rivian etc.), note they are all vaporware on scale so far save for a few (Nissan Leaf, Chevy Bolt), and the Tesla Model S of 2012 had more range than any of them does now. A seven year old Tesla is still better than any other brand 2019 EV.

      If you hate Tesla because of the outsized persona of Elon Musk then that is your own issue with his ego. Grow up! The contribution he is making is the net positive. I don’t care if he sells cars like Joe Isuzu or his promises come two years later than he says.

      Ride in a Tesla and experience the silent, immediate, amazing speed; autopilot, or the fact that the damn thing can be updated like your phone rather than going to a dealer (I’d kill to upgrade my AWFUL Ford Sync system without a dealer visit!), then you can’t possibly be such a naysayer.

      • 0 avatar
        stuki

        “We will not run on gas cars much longer, electric will ultimately win, it is more efficient and cleaner on a grand scale and there is no reasonable argument about that.”

        Electric motors are more efficient. Batteries are not. Not even remotely close. By the time they are, your IPhone will barely need a charging system at all, to last the duration of a 2 year call plan. Good luck waiting for that.

        Electrics will “win” once enough highways are “hot,” that most people only need batteries for short, local “last mile” driving. Until then, meaningful scale electrification stops with BEV/ICE hybrds, or at most some far off fuel cell science project.

      • 0 avatar
        Asdf

        “We will not run on gas cars much longer, electric will ultimately win, it is more efficient and cleaner on a grand scale and there is no reasonable argument about that. The growth rate worldwide on electric cars is explosive, and Tesla is the only American company really competing–and they’re the world’s best.”

        What a load of crock! Tesla and other BEV manufacturers have amply demonstrated that BEVs are NOT viable competitors to traditional ICE-powered cars, due to their EXTREMELY long charging times, short ranges and exorbitant prices. While the “climate change” doomsdayer nonsense will eventually go away, the internal combustion engine will not, on the contrary it will continue to dominate for the simple reason that it is fit for the job. BEVs are NOT fit for the job, and Elon Musk is among those who have proven this time and time again.

        The growth rate on BEVs is a result of immoral politicians throwing good tax payer money after bad cars (causing BEV technology development to stagnate in the process), there’s no natural demand for BEVs in the marketplace. And why should there be, when ALL BEVs (not only Teslas) are so bad they never should have been launched in the first place. When Tesla is considered “the world’s best” BEV automaker, that only proves how EXTREMELY LOW the bar has been set with regards to BEVs, because Tesla is a huge technological embarrassment.

      • 0 avatar
        civicjohn

        @NN,

        The Amazon comparison is getting pretty long in the tooth.

        Elon Musk is just a sideshow at this point, first, “we don’t need a cash raise”, then “we’ll be profitable going forward”.

        “Quickly becoming an export powerhouse” , might need a citation. And with the “new” S and X coming down the pike, where is current inventory going? I’m one of those who live near a Tesla parking lot, easily 200+ S/X sitting there.

        If you hate Ford because of the outsized ego of Ford Sync then that is your own issue. Grow up!

    • 0 avatar
      rpn453

      EVs have such poor range and long recharge times that I would even argue they’re defective, and should all be lemon-lawed. What Tesla is doing by fooling people into buying their faulty vehicles is worse than VW’s diesel emissions scandal.

      Mark my words: a Tesla owner will eventually try to take a long highway trip, run out of range, and be unable to find anywhere to insert the nozzle of the gasoline pump for a 5-minute recharge. It will be national news and all the other hoodwinked Tesla owners will realize their vehicles are also defective and be outraged. Stock prices will plummet and Musk will end up in prison where he belongs.

      • 0 avatar
        highdesertcat

        “a Tesla owner will eventually try to take a long highway trip, run out of range,”

        Tesla provides a Trip Planning service to include recharging stops along well-traveled roads.

        A guy we know and his family took such a trip from Visalia, CA to Wyoming. It took three days, but he was not in a hurry and took his time getting there.

        Holiday Inn Express, McDonald’s, DQ, Carl’s Jr and others allowed him to run an extension cord to his Tesla while they were there.

        Helpful, and included in the price of their room or meals.

  • avatar

    He is dancing as fast as he can. Meanwhile spare parts are hard to come by

    • 0 avatar
      PrincipalDan

      https://youtu.be/tAnJPknzMYQ

      Very illuminating regarding Tesla, body shops, and spare parts. Not until about 1/2 way through do things get good.

  • avatar
    hreardon

    My armchair analysis says that Tesla should license its technology to the automakers who don’t yet have their own pure EV architecture yet, and let them do what they do best: build automobiles.

  • avatar
    dukeisduke

    Raffle off a few cars?

  • avatar
    aja8888

    “Export powerhouse”????? Huh?

  • avatar
    TimK

    Chinese Gigafactory construction company honcho after Elon pleads for another six months: “F*ck you, pay me!”

    • 0 avatar
      SCE to AUX

      That factory is going up very quickly, but I doubt it will be producing cars at the end of 2019.

      https://insideevs.com/news/347618/new-tesla-gigafactory-3-drone-video/

      • 0 avatar
        mcs

        I’ve only worked on one new assembly plant from the ground up (and it was an ICE car plant). but I’d say given the 24hr around the clock schedule and if they’re swarming it with lots of workers, they could easily do it. Equipment delivery delays could get in the way, but otherwise, I wouldn’t bet against them.

    • 0 avatar
      Guitar man

      The Opel factory in Gliwice, Poland was built in 22 months so it is possible.

      Construction of the Tesla factory began in July last year.

  • avatar
    NN

    yes indeed export powerhouse: https://bestsellingcarsblog.com/2019/04/europe-march-2019-tesla-smashes-volume-record-in-market-down-3-7/

  • avatar
    APaGttH

    The $2.2 billion is even less. The over $650M in deposit money can’t be touched until the delivery of said deposit is made – each vehicle at a time.

    Given some of those deposits are for semitrucks and other commitments that are years away, as I posted in the B&B section last week, TSLA only has enough cash for two more quarters at the rate of current cash burn.

    They have to raise more capital, which dilutes overall share value. It will get harder and harder to sell the shares.

    What comes first – viable Level IV autonomy or bankruptcy.

  • avatar
    dividebytube

    You know I would love to (be able to afford) a Tesla S, or a 3, performance version. But it isn’t going to happen unless I wait a few years and buy used.

    Anyways – my point – I remember a few months ago when the 3 was finally available for sale; and all the Tesla fanboys were jumping up and down, pointing out how Tesla overtook BMW (and Audi and Mercedes) in sedan sales. And how Tesla is the wave of the future. How do they feel about Tesla now?

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • jack4x: You can do the same with early K5 Blazers, and for the same reason. Everything besides the frame is available.
  • ajla: “Because that’s the image the target buyer wants to project” What image is that? In the land of...
  • dal20402: Gen 1 SHO owner here. “Everything to keep a gen 1 SHO on the road” is all of the parts that...
  • dal20402: Yup. One of those in dark green with a grey interior, and wool seats sourced from a Celsior, would be in my...
  • ttacgreg: Thing is there needs to be a high population of said vehicles to support legacy parts. Mazda recently...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber