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The Ugly Truth About Tesla

That no one wants you to know


Is tesla out of cash again?

Dr. ValueSeeker                                                                   Jan 29, 2017

After Q3 of 2016, here is how Tesla’s balance sheet looked like. See Tesla’s Q3 shareholder letter for details. In the table below, I calculate the present cash situation at the company.

The company is often touted as a success story of American manufacturing by Pres. Trump and Silicon valley hypesters. The company is losing nearly $400M-$500M every quarter. It is really fighting with its back on the wall.  At the lower range of $400 M a quarter, that’s a whopping $4.44M every day, $185181 every hour.
    Despite calls for equity raises from various analysts, Mr. Musk has declined to do so till Q1 of 2017. Recently, the company cancelled a large Model 3 parts purchase order valued at $107M from SHW of Germany. I speculate, by logical deduction, that lack of cash is the primary reason behind this order cancellation. The other reason could be that Model 3 is significantly delayed or production target is now significantly lower, so there is no need for such a large order anymore. Of course, the other two reasons discussed in media, viz. pressure from President Trump to buy American made parts and Tesla's stated reason that the parts were below grade, are also somewhat likely. Tesla's stated reason is probably the least likely to be true.

In the table below, I show the estimated cash situation at the end of Q4, 2016. At $4.44M loss per day, by end of January, this is probably close to $0. For both Q4 of 2014 and 2015, Tesla released its earnings report on Feb 11 and Feb 10 rspectively, of the following years. It is not surprising that this year, it has been quiet os far about when the earnings will be released. Granted, the Solarcity merger could be causing some delays. but I won't rule out dismal financial situation to be the cause, and Tesla trying out everything to shore up its finances a tiny bit.

Cash and cash equivalents   (ref: q3 2016 SH letter)

Sep 30,2016

  $3,084,257

Deutsche bank credit line increase

Dec 20, 2016 LINK

$500,000

Sale of Solarcity solar portfolio

Dec 23, 2016 LINK

$241,000

Accounts payable and accrued liabilities Sep 30, 2016.

(ref: Q3 2016 share holder letter)

-$2,301,302

Capital Expenditure in Q4 2016

-$1,000,000  (estimated)

Estimated losses in Q4 2016

-$400,000

Remaining cash at end of Q4
(assuming Q3 bills were paid)

 $123,955

Tesla’s estimated cash position at end of Q4, 2016. All figures in thousand USD..

 

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