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Tesla Seeks $1.5 Billion Junk Bonds Issue To Fund Model 3 Production (reuters.com)
As Tesla seeks fresh sources of cash to increase production of its new Model 3 sedan, the company announced on Monday that it would raise about $1.5 billion through its first-ever high-yield junk bond offering. "The debt offering marks Tesla's debut in the junk-bond market and the company will start road-shows on Monday, IFR reported, citing lead bankers on the deal," reports Reuters. From the report: Tesla has been riding high on investor expectations that its Model 3 will be a mass-market hit, with shareholders pushing its market value above that of General Motors Co and Ford Motor Co, the top two U.S. automakers that produce millions of cars each annually. But Tesla has yet to make an annual profit and its stock is a favorite among short-sellers, who continue to bet Tesla will fall short of its shareholders' high hopes. So far, Tesla has been raising money to pay its bills with a combination of equity offerings and convertible bonds, which eventually convert into shares. In March, the company raised $1.4 billion through a convertible debt offering. Following the announcement, Standard & Poor's assigned a "B-1" rating for the bond issue -- deep into junk credit territory. S&P also maintained its "B-" long-term corporate credit rating on Tesla. "We could lower our ratings on Tesla is execution issues related to the Model 3 launch later this year or the ongoing expansion of its Models S and X production lead to significant cost overruns," S&P said in a statement on the bonds. Meanwhile, Moody's assigned a junk "B3" rating to the bond issue and said the company's rating outlook was stable.
With the Model 3 costing just under Eighty Thousand there aren't going to be many buyers.
First of all, you have the price all wrong because the base model is $35K. Secondly, Tesla already has more preorders to fill than they can keep up with which is why you don't see advertisements for Tesla's cars.
People with money, are not going to open their wallets for it.
That must explain why Tesla sells every single car they make. -_-
You're a dummy.
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Edison didn't win the electricity game by producing a better product... he simply understood the way things worked better than Tesla.
No, Edison was an asshole who literally electrocuted neighborhood dogs and sued his competition of rudimentary patents because the only thing he cared about was money. Telsa cared about science and the advancement of society rather than profit and allowed companies infringing on his patents to continue, despite holding arguably the most valuable patents in history.
Telsa wasn't perfect but Edison was a total asshole.
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The margin on S and X is 25%. Model 3's expected margin is also around 25%.
Furthermore - and please pay attention to this part - A company undergoing an exponential scaleup is not supposed to be returning profits. They're supposed to be investing every last penny they take in in order to minimize how much additional capital they have to raise to fund the scaleup.
He's really very... gentle... and fuzzy. We're becoming fast friends.