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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.
To bad DeLorean isn't still alive. He could have helped Tesla with some creative funding ideas...
I have to return some videotapes...
This is after another press release a few days ago where they stated that Tesla lost 60k pre-orders. That stock could be a hyperloop if manufacturing slips at all.
https://www.tesla.com/blog/tes...
Tesla Model 3 in Full Production
I'm not sure why people are focused on stocks when there is a technology website rather than a business/trader website. I keep reading all this bad-mouthing about Elon's ventures but they have all been panning out albeit a bit delayed. I get the feeling the people writing these articles may have a vested interesting in causing a momentary dip in the stock price because they continue to be wrong time and time again.
Anons need not reply. Questions end with a question mark.
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.
Anons need not reply. Questions end with a question mark.
Hehe... um... might want to check your pricing. Model 3 starts at $35k (without credits). With a standard featureset comparable to a BMW 3-Series optioned up to $41-42k.
Of course you can option it up further. The current announced options are:
* Premium upgrade package (misc added luxury details): +$5k
* Metallic paint: +$1k
* Long-range (310 instead of 220 miles range; 5,1 second instead of 5,6 second 0-60; 8yr/120k mi battery warranty instead of 8yr/100k mi): +$9k
* 19" "turbine" wheels: +$1,5k
* All-wheel drive: TBD (stated to be cheaper than on the Model S, where it costs $5k)
* Performance variants (should be a 0-60 in 3-4 seconds): TBD
So, with every option available you can bring it up to maybe $55k (without credits), possibly more for fully optioned-out performance versions. But it's not even possible to bring to $80k.
"Stores and malls" are not "closing at an alarming rate". The US is in an expansion.
Giving a bond offering is hanging onto stocks. That's the whole point, to avoid dilution of stock.
It's very simple. Tesla has customers lined up for nearly two years, and that's if their scaleup goes as planned. They have business out the wazoo, if they can deliver. Which takes tons of money. There's about a dozen different ways they can get large amounts of money, but the goal is to do so in the manner that minimizes how much ownership in the company they have to give up to do so.
He's really very... gentle... and fuzzy. We're becoming fast friends.
Selling more convertible stock means more dilution. Selling bonds means that they want to hang onto their share in the company, and feel that paying interest after the plant is online is worth the benefit of not having to dilute.
He's really very... gentle... and fuzzy. We're becoming fast friends.
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.
Uhh, that's a 25% GROSS margin. The profit margin of TSLA is currently -12.06%. Negative. Tesla does not make a profit today, nor has it in the past.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Model S was a $50k car for $60k, the Model 3 is a $35k car for & 49k. This is not a surprise to anyone who's been watching tesla for any length of time.
I own a model S, I love it and think it's the best car ever made. It is also nowhere even close to what Elon promised it would be.
Tesla is the absolute slimiest company I've ever done business with. When they aren't flat out lying about what their product can do, they're wildly exaggerating it, or actively at war with their existing customers.
The Model S is still the best car on the market today. But if I have to replace mine, I could not in good conscience give another penny to such an unethical company. Which is a shame because no other company has yet decided to try to compete with Tesla. I really hope I can keep my Model S going until a competitor arrives, but Tesla isn't making it easy.
"not yet available" is a bit of an exaggeration considering it will NEVER be available with the hardware currently on those cars.
Of course considering that the original AP hardware on the S can't do any of the things that Elon promised it would when it was first launched either, that's no suprise. Of course Tesla's been getting a pass on the outright lies around the model S so I'm not sure why they would bother caring about telling the truth on their newer cars.
Anyone who pays for "full self driving" is a sucker.
Rei observed:
Selling more convertible stock means more dilution. Selling bonds means that they want to hang onto their share in the company, and feel that paying interest after the plant is online is worth the benefit of not having to dilute.
Exactly so.
Junk bond status begins at BBB- rating. That doesn't mean they aren't a good investment. It merely means that they carriy greater risk than do "investment grade" bonds. What type of risk that consists of, and the degree of risk involved varies from bond issue to bond issue. Wikipedia's article on high-yield debt is fairly well-written, and it does a good job of explaining the basics. I recommend it to people who feel tempted to throw the term "junk bond" around without actually understanding what that actually means.
Elon haters are legion. Many of them are "car guys" who bet their reputations - and in some cases their shirts - that Tesla would fail before it ever sold a car. They resent Musk because he proved them wrong. Others are Washington beltway bandits who fear the disruptive effects of SpaceX's success on the defense industry gravy train, because it's their oxen that stand to be gored by it ...
Check out my novel.
A lot of people thought their money increased 12-fold under Bernie Madoff and Charles Ponzi, too. Until you actually the sell the stock, you haven't made a dime.
Maybe I need to clarify. Most advanced. Best features. Best practicality.
I won't claim best build quality or best reliability.
There is simply nothing else on the market like it though, it has zero competition, so they can basically get away with anything, as they constantly prove. It's mind boggling to me that no other company is even making the slightest effort to compete.
I actually agree with that. I think it's stupid to pay for full self driving, and I think Tesla is being way too optimistic the timeframe. I'm not prepared to say that the hardware can't support it, but I think the challenge - both regulatory and technological - is IMHO much harder than their timeframe supports.
AP works, although its reliability level gives it mixed reviews (more positive than negative, but still decidedly mixed). Tesla really got set back when they had to start over with AP2 after the contract dispute; it's only just now getting up to the capabilities of AP1. Some people find that AP takes a great load off their mind on long trips, having only to make the occasional correction rather than hyperfocus on every detail - while others find it puts more stress on them, having to watch doing nothing but still have to make corrections at random intervals. Most people like the adaptive cruise control, but that's not as impressive as what people really want from autopilot. Self parking and the like is also popular, but not considered worth the value on its own.
There are a lot of people who think that autopilot is "the reason" to get a Tesla - they love it, they think it's the future, etc. Other reviews are decidedly more mixed. And of course FSD is a phantom product at the moment.
He's really very... gentle... and fuzzy. We're becoming fast friends.
Uhh, that's a 25% GROSS margin. The profit margin of TSLA is currently -12.06%. Negative. Tesla does not make a profit today, nor has it in the past.
Snapchat lost over $500 million in 2016, and was even arrogant enough to declare in their IPO that they haven't made a profit, and may never make a profit. Yet they're worth billions.
Your talk of "profits" and financial common sense has no place in 21st century business. Narcissism, fake news, and hype are the new currency.
The abundant test drive reviews disagree with you.
Motor Trend - Exclusive: Tesla Model 3 First Drive Review - Motor Trend
Top Gear- Tesla Model 3 review: first drive of Elon Musk's affordable EV
The Verge - A closer look at Tesla Model 3's spartan interior
The Verge - Tesla Model 3 first drive: this is the car that Elon Musk promised
Bloomberg - Tesla’s Model 3 Arrives With a Surprise 310-Mile Range
Bloomberg[/COLOR] - Driving Tesla’s Model 3 Changes Everything
Car and Driver - 2018 Tesla Model 3: Everything We Know | Feature | Car and Driver
CNET - Tesla Model 3 is well worth the hype
Car Advice - Tesla Model 3 quick drive review | CarAdvice
Fortune - Here’s What Reviewers Think About Tesla’s Model 3 So Far
Ars Technica - All the things the Internet hates about the Tesla Model 3 have me excited
Mashable - Driving a Tesla Model 3 is pretty damn awesome
TechCrunch - Your smartphone is the key for the Tesla Model 3
But hey, feel free to live in your own little world and deny reality to your heart's content.
He's really very... gentle... and fuzzy. We're becoming fast friends.
Every word out of their mouths is a lie.
When they unveiled AP originally they made the following promises as they took everyone's money:
- hands free on ramp to off ramp driving
- summon that will find It's way to you anywhere you are on private property
- automatic emergency braking that would bring the vehicle to a complete stop
- stop sign and traffic light detection
- automatically adjust to speed limits
- system that worked at any speed
Not a single one of those items was ever delivered. Now they have AP2.0 which does even less than the original, but that they now claim will be full self driving if you pay enough money. Thing is, AP2.0 can never be full self driving. It doesn't include enough hardware to do so. There is no way they'll ever get approval to put it on the road with autonomy when it doesn't even have rear of cross traffic radars. And the version currently available still hasn't caught up to their own product from 2 years ago.
And it doesn't end there either. They've also been caught lying about horsepower, battery capacity, etc. After charging people an extra 10,000 for ludicrous mode they were caught putting counters in the cars that limit your acceleration if you use it too often, the list just goes on and on.
And all of that is only secondary to my real objections to them.
After purchase they actually reached in to the car that I own outright, and without my permission removed functionality that it had at delivery. In fact, with every single software update they removed more functionality. Autopilot was at its peak at the end of 2015, ever since then every software update has added nags, limited where it can be used, limited the speed with which it can be used, added punishment if it nags you more than 3 times in a trip, etc.
You can pretend that software updates are optional, but if you don't update other features stop working, for example, of you're still on the firmware where AP was at its peak, you'd no longer have voice control or mapping.
Beyond that, Tesla won't allow any third party repair. There is only one place that can fix a Tesla, and that's Tesla themselves. And I'm not just talking major repairs either, you can't change a door handle or a side mirror without reflashing the firmware, something only Tesla can do. And even if you could, they won't sell many parts to any third party. In addition to that, they have the highest hourly shop rates I've ever seen, and extremely high parts prices, if you can even get an appointment, and if they can even get the part themselves. Forums are full of people waiting 6 or 8 months for parts for collision repairs. And 2-3 months for a simple service appointment. And that's before Model 3 hits the road in large quantities.
Tesla is the only company I've ever seriously considered a lawsuit against, and I still haven't ruled it out.