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Last week, Tesla finally realized the reality of its business and decided to raise more funds by selling stocks and issuing debt. What began as a $ 2.3 billion prospectus quickly became a $ 2.7 billion offering. With only about $ 2 billion of cash in reserve before the increase, Tesla should now be able to spend the year with ease.
The big surprise grabbed the online naysayers bankruptcy-cheerleading #TSLAQ. Tesla stock shot above $ 250, the level at which the company raised funds in the past. The end times have been delayed. Tesla is not Theranos.
That's not to say that Elon Musk is happy with the win. He probably did not want to raise more money from Wall Street. But we can not deny the reality of business in the automotive industry: car manufacturers are gluttons of the capital. Maybe Musk should have held onto a Mars mission and taken control of the electric vehicle revolution.
Read more: Tesla is finally raising capital – and it's high time
Musk now has the right to laugh until the bank, while residents of the #TSLAQ fever marsh relied to some extent on Tesla's loss of access to sources of funding. That's what a lot of professional short sellers have bet on, and if Tesla had been ruled out of capital raising, she would actually be in trouble.
But that would never happen, and although Musk probably knows it, I would bet that he sincerely wanted Tesla to prove that it could be sustainably profitable after two consecutive quarters at the end of 2018. That's it. the fault of Tesla's CEO. not up to expectations; its determination to reinvent manufacturing has detracted from the deployment of Tesla Model 3. The production speed of the vehicle was 12 months lower than that a 21st century car manufacturer could have achieved with a minimum of tragedies.
But hey, water under the bridge!
Risk for Tesla bears and bulls
The risk is now that, although Tesla's critics will have to comfort themselves with their own advice, the company's boosters will probably feel more able to resume their daffy predictions about Tesla's magnificent future. With the reduction in cash in 2019, Tesla can now run a titanic pivot that consists of becoming a … taxi service?
Yes, you read it well. It seems now that Musk has been captivated by the kind of money that Cruise, Waymo and maybe Uber are looking for to win with a self recovery. Tesla is talking about a million robots on the road, with profit margins that would shame the traditional automotive sector.
OK, profit is a legitimate consideration. Robotaxis could generate margins of 30%, against 10% for a solid mass market builder. There is a reason that many players enter the space.
But is there anything less sexy than the taxis? Tesla has made a name for itself by producing the coolest electric cars already. Before Tesla, electric vehicles were glorified golf cars. After Tesla, they were guided missiles on four wheels. Tesla was the Ferrari of electrification.
Could Musk get bored so much that he resigns from his CEO position?
Musk now seems to want it to be a cyborg reboot from a beloved 1970s sitcom (What did Judd Hirsch know about Ludicrous mode?). I have been covering Tesla for over ten years and this latest musk movement is downright depressing. It's also understandable. Musk is a quick study, and more than ten years at the helm of a automaker have shown him that … it's hard to make money in Silicon Valley in the auto sector. He is good at math and he could see even more trips to Wall Street with a hat in hand to ask for money to build more and more cars that can display narrow margins.
By the way, I have nothing against robotaxi services, but Cruise and Waymo do not look like sexy and cool companies, preferring to think of themselves as complex and complex engineering efforts, requiring immense human brain. In other words, the ultimate science projects.)
On a more encouraging note, if Tesla became a robotaxi company, Musk would be so bored that he could, could, entrust the operation to the constitutional bean counters who will be more talented than him. and is stepping down as CEO, focusing on SpaceX and the aforementioned mission on Mars.
If this is the end of the game here, then the big robotaxi fundraiser of 2019 would not be just the most boring ever raised by Tesla with 2.7 billion dollars, but the beginning of a rebirth Elon Musk who could allow him to realize his own dream and to retire. the red planet.
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