The Tesla bears have been saying it for months.
Elon Musk is guzzling cash to fuel his burgeoning transportation empire, and he’s going to need new sources for that cash sooner rather than later.
And so for them, there’s one sentence in Tesla’s second quarter earnings letter that served as a small form of vindication [emphasis ours].
We anticipate that direct leasing will rise from 8% of deliveries in Q2 to about 15% of deliveries in Q3, as we have reached our funding limit with a banking partner. We anticipate adding new partners that will allow us to fund our planned growth in the future. We recognise revenue on directly leased deliveries as cash is received over the lease term of typically three years, on both a GAAP and non-GAAP basis.
This is what the shorts believe will be the end of Tesla, the fact that it will run out of funding for its incredibly ambitious plans like completing its massive Gigafactory (which is only 1/6th completed as yet) or, you know, self driving public transportation (see: Musk’s Master Plan Part 2).
Now, none of this is to say that Tesla won’t find more funding. It is, however, to say that the company is burning a lot of cash. In its quest to become a vertically integrated transportation company, Musk picked up the flailing solar energy firm he co-founded with his cousin, SolarCity, just this week. SolarCity will add another $650 million bill per quarter on top of what Tesla already spends per quarter.
And Tesla spends quite a lot, about $700 million a quarter since it ramped up the Model 3’s production.
We should note that Tesla has $3.25 billion in cash right now.
Anyway, anyone want to loan Elon some money?