Tesla seeks another $1.5 billion to fund Model 3 production by selling junk bonds - Sensationalist Headlines

[url]http://www.motortrend.com/news/tesla-needs-tesla-seeks-another-1-5-billion-to-fund-model-3-production-1-5-billion-build-model-3/[/url] [quote]Last month, Tesla began production on its most affordable vehicle to date, the Model 3. But as we found out in its quarterly report, despite revenue being up, the electric car startup burned through an incredible amount of cash last quarter. To continue paying its bills and fund production of the Model 3, Tesla now has to raise a whopping $1.5 billion. Reuters reports that Tesla plans to issue junk bonds, a relatively high-risk investment that companies typically issue when they’re trying to raise cash quickly. This will be a first for the startup, as it’s previously raised cash by selling equity and convertible bonds, which, as the name suggests, can be converted into shares of the company. But while Tesla stock is up 67 percent for the year, and the company is currently valued at $60 billion, the fact that it’s never turned a profit could still be an issue. Standard & Poor’s gave the bonds a B- rating, while Moody’s gave them a B3. Neither rating is anywhere close to investment grade.[/quote]

Good luck Mr. Musk, you've raised a lot of value so far into your company I would think.

No surprise that a bond issued by Tesla would be high risk.

Musk always gave me the impression that he is a gambler.

I wouldn't mind taking that risk.

[QUOTE=Str4fe;52552172]Musk always gave me the impression that he is a gambler.[/QUOTE] that's how he has become so successful. you don't get to where he is without taking huge risks.

[QUOTE]This will be a first for the startup, as it’s previously raised cash by selling equity and convertible bonds[/QUOTE] Can Tesla still be considered a startup company at this point? Genuine question btw.

[QUOTE=LAMB SAUCE;52552901]that's how he has become so successful. you don't get to where he is without taking huge risks.[/QUOTE] Exactly. What people fail to realize though is that for every person that succeeds, there are hundreds, if not thousands of those that don't. Survivor bias is real. Take it into account before judging how successful someone is.

Looks like Tesla aren't having any issue getting investors to buy the bonds: [QUOTE] It looks like Tesla is having no difficulty selling billions in new debt to fund its ongoing operations, launch a new car, and bolster its balance sheet, which is confronting a face-melting $2-billion cash burn for the rest of 2017. "[CEO Elon] Musk brought his charm offensive to the debt market at a meeting for bond buyers in Manhattan on Monday and came away with orders for $600 million after just a few hours, according to investors briefed on the matter," Bloomberg reported. "The session was part of a four-day debt-marketing extravaganza aimed at raising $1.5 billion to support the electric carmaker's new mass-market Model 3." Tesla's debt is junk-rated: B- by S&P and B3 by Moody's. But with investors craving yield in a historically low-rate environment, the Tesla story is evidently as irresistible to bond buyers as it has been to equity customers, who have snapped up the billions in new shares Tesla has issued over the past two years is previous capital raises.[/QUOTE] [url]http://uk.businessinsider.com/investors-eating-up-teslas-junk-bond-sale-2017-8?r=US&IR=T[/url] Musk even said Model 3 demand will exceed his previous guidance by quite a bit: [QUOTE]Goldman Sachs hosted a meeting with Tesla CFO Deepak Ahuja for bondholders to discuss the opportunity that the new bonds offer and Musk joined in on the phone to answer a few questions. Two sources at the event told Electrek that Musk updated his projection to “700,000 units per year” and he added that he could see it eventually go even higher. In comparison, BMW 3 Series and Audi A4, two vehicles against which Tesla hopes to compete with the Model 3 in the mid-luxury sedan segment, have annual production rates of about 400,000 and 330,000 cars per year respectively.[/QUOTE] [url]https://electrek.co/2017/08/07/tesla-model-3-annual-demand-elon-musk/[/url] Also the line in the OP about Tesla never making a profit is incorrect.

I like Musk and I know his past endeavours have been successful and profitable, but I always have a bad feeling about Tesla being able to stand on its own two feet in the free market. I hope that his work pays off.

Meh, the company is worth US$60b, raising $1.5b on bonds will be easy for them. [editline]9th August 2017[/editline] I think Tesla is greatly over-valued but the fact it is over-valued demonstrates there are people who will invest in the company.

one thing that continually strikes me as odd is that everytime i hear something bad about tesla they're usually going on about its finances, all the money its spent, all the wasted billions in government grants, its like these people don't understand that car companies are extremely capital intensive and require large amounts of reinvestment to grow and expand, as well as large amounts of cash just to buy your materials. but then even after that, tesla is actually making electric cars that did not exist 10 years ago, nor would have existed today without their efforts, so its all just to shit on tesla and electric cars in some fucked up attempt to preserve the status quo because normal car makers pay out dividends

[QUOTE]Tesla announced on Monday that they are raising $1.5 billion in debt in order to fund the expansion of Model 3 production. Now we learn that their bonds were oversubscribed by $300 million – bringing the total raised to $1.8 billion. If anyone still had doubts about Tesla and CEO Elon Musk’s abilities to efficiently raise money, it’s again being disproved by the terms that they are able to secure. According to Informa Global Markets (via CNBC), they secured the 2025 senior notes at a yield of 5.25 percent despite receiving junk bond ratings from S&P and Moody’s.[/QUOTE] [url]https://electrek.co/2017/08/11/tesla-tsla-bonds-oversubscribed-model-3-production/[/url]

[QUOTE=Sableye;52561408]one thing that continually strikes me as odd is that everytime i hear something bad about tesla they're usually going on about its finances, all the money its spent, all the wasted billions in government grants, its like these people don't understand that car companies are extremely capital intensive and require large amounts of reinvestment to grow and expand, as well as large amounts of cash just to buy your materials. but then even after that, tesla is actually making electric cars that did not exist 10 years ago, nor would have existed today without their efforts, so its all just to shit on tesla and electric cars in some fucked up attempt to preserve the status quo because normal car makers pay out dividends[/QUOTE] Not to mention its massive advancements in the field of industrial automation.