[ad_1]
For the first time in a long time, Tesla (TSLA) appears to be setting the table to raise capital, as the company has added a note in its quarterly report to the SEC stating that it "could choose to look for money. other sources of funding ".
About a year ago, President and CEO Elon Musk lobbied for Tesla to become profitable and to maintain its own operating cash flow.
It worked for the last two quarters of 2018, but Tesla returned to a loss in the first quarter of 2019.
In the teleconference following the release of Tesla's financial results, Musk opened the door to a capital increase:
"At this point, I think there are benefits to raising capital. It's probably about the right time, but yes.
The CEO had previously rejected suggestions that Tesla would raise more capital.
Following Musk's comments, Tesla also indicated that they could look for "sources of funding" other than cash flow from their core businesses:
"In addition, we expect cash generated from our core businesses will generally be sufficient to cover our future capital expenditures and repay our short-term debt, although we may choose to pursue other sources of financing."
But the company did not specifically mention capital raising in the market as Musk.
Instead, Tesla cited as an example its debt financing for Gigafactory 3 in Shanghai:
"For example, we expect most of our investment in Gigafactory Shanghai to be financed by indebtedness to local financial institutions in China, including a credit facility of RMB 3.5 billion entered into by our Subsidiary in March 2019. As always, we evaluate capital expenditures and may decide that it is better to raise additional capital to finance the rapid growth of our business. "
Nevertheless, financial analysts see this as the first sign of Tesla's readiness to mobilize more capital.
Electrek's Take
We said that Tesla should return to the financial markets for a while despite Elon's comments on this.
That said, it would have been much better to do it 3 months ago.
Now, it seems that Tesla is doing it from a position of weakness, but it would probably be worth it.
During the teleconference, Elon made an interesting comment about why he was reluctant to raise more capital before:
"I do not think that capital raising should replace society to make it work more efficiently. That is why, in this sense, I think it is important to have a rigorous financial discipline and to make sure that our expenses are not superfluous and that we are only saving capital. If we continue to raise capital every time, we now have the function of forcing the improvement of the functional functioning of the company. "
The problem with this statement is that it is obvious. You should not use fundraising as an excuse for not being capital efficient.
Everyone agrees on this point, but that does not mean that you can not go to the market if you need help to fund large-scale projects like those Tesla is currently working on.
I think investors would be willing to pay for this if Tesla presented a capital increase as a way to accelerate the growth of the company, which is most important for its mission to accelerate the advent of sustainable transportation.
What do you think? Let us know in the comment section below.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.
[ad_2]
Source link