"Tesla has trouble paying bills": Is Wall Street ready to punish Elon Musk for his shenanigans?

You must give it to Elon Musk. The multibillionaire knows how to attract the attention of the media, even if Michael Avenatti kind of way. That he tweeted that he had "obtained" funds to take Tesla in the private at $ 420 per share, was sued by the Securities and Exchange Commission when he said that the funds did not materialize, mocking the agency after she agreed to settle allegations of securities fraud against him (but before a judge approved the agreement), or smoking a wreck at an internet radio show, the guy is a real nest of hornets for the shareholders.

At a time when we are all overloaded with inputs, like my colleague Nick Bilton noted that Musk's ability to cut gibberish stacks with its own version of it was probably effective enough to draw attention to Tesla, its $ 40 billion state-of-the-art electric car manufacturer; Space X, his company of rockets; and Boring Company, his company building an underground tunnel in California. (Good luck to James Murdoch, a board member who is rumored to be a president would limit this behavior.)

But Wall Street is tired of his shtick? Just as there seems to be general agreement in the finance canyons that, all things considered, it would be better for Musk, 47, to stop behaving like an impetuous teenager and more like a leader. business, there is still widespread disagreement about which way Tesla is going. Is it sinking into bankruptcy, which will soon belong to demanding creditors, or is it becoming the next Amazon-Lite? This seems to be the burning issue for the moment among Wall Street analysts.

Some, like Maynard Um, at Macquarie Research, began its Tesla coverage on Tuesday with an "outperformance" rating and a price target of $ 430 per share, or $ 10 more per share than the marijuana-inspired price, from which Musk announced private company in August. Um wrote that Tesla is a "disruptive technology growth company" on "the equally disruptive markets of electric cars, energy storage and energy production". He predicted that Tesla would achieve "profitability" in the second half of 2018, a point that remains to be seen, given that Tesla recorded an operating loss of $ 1.7 billion in the first six months of the year. year. Tesla's stock price is around $ 250 these days, so Um and all the investors who follow his advice to buy the stock could wait a long time up to $ 430.

Then there is the Berenberg Bank, which, in the great tradition of Henry Blodget and Amazon, once upon a time, has a price target of $ 500 on Tesla. The market, observed the 428-year-old German investment bank, "underestimates the full extent of Tesla's technological advantage. . . which manifests itself in the entire electronic architecture of the vehicle as well as in the battery management system. "

Perhaps instead, is the market really focused on Tesla's production problems, its ongoing operating losses, its impending debt repayments – $ 1.8 billion of the $ 11 billion debt? Tesla dollars are due in the next 13 months – and its cash flow down. Fahmi Quadir, The founder of the small capital Safkhet is famous for calling Valeant Pharmaceuticals early. Hedge fund manager Bill Ackman just as famous lost over $ 4 billion betting that the opposite would be true. In July, Quadir began to bet that Tesla's share price would fall.

Quadir told Bloomberg yesterday that Tesla was "between the hammer and the anvil" because it needs more capital – some say up to $ 2 billion more – and that's what it means. it will probably be forced to raise new capital on the stock markets, probably at a reduced price, or on the debt markets, which is already choking with Tesla's debt. If Musk uses the debt path, he will probably have to pay for it. The $ 1.8 billion senior notes of the company, issued at a 5.3% interest rate last year, now report 8.65%, which means that Musk will have probably at least 8.65% pay, and probably more, to convince them to buy a new Tesla debt issue. . "It is becoming increasingly clear that Tesla is having trouble paying his bills," said Quadir. "I saw a lot of the same thing with Valeant."

Another indicator of the problem is the rising cost for investors who want to insure the risk of Tesla's default on its debt. The required premium – in advance – to secure $ 10 million worth of Tesla bonds in the event of default over the next five years is now $ 2 million. Two months ago the cost was less than $ 1.3 million. In other words, the market is telling investors that the risk of Tesla's debt default is increasing, and whether you want to react, whether you own Tesla bonds or not, it will cost you $ 700,000 more today. to win this bet that it would have cost two months ago. Among the debt market concerns with Tesla, three impending convertible debt payments are due in the next 13 months. If Tesla's shares traded higher than the current price, the creditors would convert the debt into shares and the problem would disappear. But, for example, the maturity of the $ 920 million convertible debt maturing in March will have to be repaid with some of Tesla's approximately $ 2 billion of liquidity, about half of that of the company. 39; last year, unless the action of Tesla is trading at $ 360 per share. , and that seems more and more unlikely.

If Musk is the least concerned about this, he will not let it down. In an email to employees last week, he said Tesla was "about to achieve profitability and prove that the opponents are wrong". He recently tweeted on Tesla's Model 3 that had "the lowest probability of injury" of any vehicle ever tested. no matter what that means, and he retweeted the news that the Model 3 is the best-selling car in the United States in the country. On Sunday, he also announced the launch and landing of one of his Space X rockets from an air force base in California.