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This is what you want to hear as a shareholder, is not it?
Elon Musk, co-founder and CEO of Tesla (TSLA), said in an interview with HBO by HBO last weekend. In fact, Musk said the company was "close to death" in the "one-digit weeks" after facing big problems.
Because the builder was "bleeding money like crazy," he forced management to come forward with rushed solutions. Efforts may have paid off, but they weighed heavily on Musk. "No one should spend as many hours at work," he said during the interview. "It's not good, it was very painful, it hurts my brain and my heart."
The stock was initially several percentage points lower in Monday's trading session, but has since reversed, rising nearly 5% to $ 341.50 US. trading.
Why does the feeling change? Although Tesla was almost on the verge of death, investors seem to be relieved by Musk's openness about it. After all, if he still thought that the company was about to run out of time, he would surely not have made this "close to death" sighting now. It means that the problem is in the rear view mirror and that Musk thinks that the company now has a solid financial base.
Of course, bears have a different point of view, which suggests Tesla's desperation. innovation, especially on its financial statements. Just go on Twitter and you will not notice any shortage of suggestions and allegations about Tesla's allegedly crooked leadership team. Some argue that this financial situation should have been disclosed to shareholders.
Whatever it is, we know that Tesla's cash problems occurred in the first half of this year, as the builder was desperately trying to increase the production of the Model 3. With hundreds With thousands of orders pending and many fixed costs, Tesla was under pressure to increase its production rate. The bills have accumulated and the revenues have not been high enough, which has resulted in a significant use of its cash.
Finally, the company understood and started producing thousands of Model 3 sedans a week. In the third quarter, this allowed Tesla to achieve net profitability and positive free cash flow, which will help ease the financial burden on the company.
The key to the future? Tesla must perform a difficult balance exercise. The company must remain financially vigilant, but it must also allocate funds for R & D, factory maintenance and the construction of future Gigafactory sites.
Musk seems to have a new state of mind with regard to the financial situation. that Tesla should be autonomous at this stage. This has been clear for several quarters and management has been much better at achieving better results. They will have to maintain this state of mind to see more success eventually.
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