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?
|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.
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