Comprehensive M&A data with integrated detailed company information

Tesla’s Musk is open to idea of capital increase
Posted on Thursday, 25 April 2019 13:06
A capital increase could be on the cards for loss-making Tesla after Elon Musk admitted in a conference call for Q1 2019 results “there is merit to the idea of raising” money.

The comment was made in response to Bernstein analyst Toni Sacconaghi, who noted investors believe the car maker could be better off with additional cash for expansion, especially given that it spent USD 2.00 billion in the first three months of 2019.

Musk pointed out he has been careful to make sure Tesla has a solid foundation and an appropriate financial discipline in place, which has accelerated cost reductions and helped cut back wasteful expenditures.

He noted while there is still more work to do, the manufacturer is operating far more efficiently than a year ago - it has made dramatic improvements across the board - and so, at this point, there is merit to the idea of a capital raising.

Tesla had USD 2.20 billion of cash and equivalents on its balance sheet, as at 31st March 2019 (31st December 2018: 4.28 billion), after paying off a USD 920.00 million convertible bond in March.

Net loss attributable to stockholders narrowed to USD 702.14 million, or USD 4.10 per share, in Q1 2019, from a loss of USD 709.55 million, or USD 4.19, in Q1 2018.

The company is still in the process of building its Shanghai Gigafactory, which is expected to have production volume of 1,000 to 2,000 Model 3s per week by the end of 2019, instead of the previously anticipated 3,000 a week by year-end.

In the Q1 2018 statement, the company said: “It is imperative for the future of Tesla to produce Model 3 vehicles at high volume with sustainable profitability.

“We have learned valuable lessons, not only about mass manufacturing but also about capital efficiency, which are incorporated into our expansion plans.

© Zephus Ltd