Tesla Motors (NASDAQ:TSLA) Facing Severe Cash Crunch

Tesla Motors (NASDAQ:TSLA) Facing Severe Cash Crunch

Tesla Motors (NASDAQ:TSLA) Facing Severe Cash Crunch


Facing a severe cash crunch, Tesla Motors (NASDAQ:TSDLA) plans to raise money this year to help fund development and production of its new Model 3 sedan and build out a massive battery factory.

The EV maker plans to raise money through an equity or debt offering, it said in a filing with the U.S. Securities and Exchange Commission.

Some of that money could also support Tesla’s planned acquisition of its money losing sister company, SolarCity Corp (NASDAQ:SCTY).

Tesla CEO Elon Musk warned the combined companies might need “a ‘small’ equity capital raise” in Y 2017. Mr. Musk is the major shareholder in both firms.

Tesla’s cash situation has taken on additional urgency with the $2.6-B SolarCity deal announced on 1 August.

Mr. Musk also said that Tesla plans to release an update of its partly automated self-driving system “in a few weeks.” US regulators are probing a 7 May fatality in Florida in which a driver using Tesla’s Autopilot system crashed into a truck.

The timing of the SEC filing on Tesla’s fundraising plans “reinforces the need for SolarCity to have quick access to capital,” a Barclays analyst said.

Tesla’s cash position has seriously deteriorated, despite a $1.7-B equity raise on 19 May 2016

This August, Tesla said it closed Q-2 with nearly $3.25-B in cash, but in July it repaid $678-M on a revolving credit line and planned to redeem $422-M in convertible notes.

That would leave the company with $2.15-B in cash.

Mr. Musk  told analysts earlier this year it planned to spend $1.75-B in 2-H on plants and equipment, primarily to get the $35,000 Model 3 ready for production next year and finish construction at the Reno, NV, “gigafactory.”

As a result, Tesla would have around $400-M in cash at a time when both Tesla and SolarCity have been burning cash.

Tesla has posted operating losses in 14 straight Quarters and negative cash flow since early Y 2014.

The Big Q: How long to the Chapter 11 filing?

Symbol Last Trade Date Change Open High Low Volume
NASDAQ:TSLA 200.77 1 September 2016 -11.24 209.01 211.1 200.5 7,940,500
HeffX-LTN Analysis for TSLA: Overall Short Intermediate Long
Neutral (-0.23) Bearish (-0.41) Bearish (-0.31) Neutral (0.03)

All of my Key technical indicators are Very Bearish, the next support is 199.11, then 190.05, then NIL.

Elon Musk’s SpaceX firm suffered a major setback early Thursday its Falcon 9 rocket exploded on site destroying a $200-M communications satellite owned by Facebook (NASDAQ:FB)

Stay tuned…

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