^Is that to be expected since the tax credits are expiring soon? Shouldn't they be flying out the door before the price jumps?

It’s from selling out of backlog (pent up demand). Tax credits are halved Q1 2019 (7500 -> 3750), so you might expect demand to be pulled forward into Q4 from Q1 2019, but 1) there is a promised cheaper model coming so if you are price sensitive you may prefer to wait and take the 1/2 credit, and 2) if you aren’t especially price sensitive (3750 is off a Q3 ASP of ~60k), you might prefer to wait until news flow improves and the company appears more stable so as to avoid reported delivery/service/quality issues. Bigger issue is depletion of backlog tho.

the mines on this being short is insane.. you have a buyer buying up all you can eat @ 250, you have Australian firms with direct tsla business and connections giving upgrades, you have giant mutual funds buying up a huge position and then filing it as it trades near the wall.. fun times.

Sure, if you are trying to day trade it, which is pretty much insane.

Most people on here are in the long game so 250 or 270 on a day to day basis doesn't really matter. It's the large binary events coming over the next 3-6 months that will tell the story. Either TSLA gets cut in half (or much, much worse) in the next year or the bulls would have won.

well, we have been getting weekly puts every week for over a month now,, quite insane, and a lot of $ left on the table, but cant complain in the end.

Tesla has done enough to get a one year rope from creditors. The markets will easily absorb another 2 or 3 billion in equity and/or convertible debt.

I'm actually 100% sure Musk is already getting calls every day from bankers wanting to help Tesla do just that.

That would be 100% certain if not for Musk's tweeting habits potentially getting the SEC involved again. Musk's time line is short (he probably needs the money before the end of the year) and he can't really afford any kind of serious investigation.

If the board manages to muzzle Musk's tweeting habits, then TSLA will easily survive for another year.

That IF is starting to look pretty big though.

Ah ok, I don't play the weekly put game, the premiums are insane! Seems like you have to be right and get a nice move to break even, let alone win.

Premiums on January/June are insane also, but at least you have time for the big events to hit, not just normal 5% swings.

grizy,
Can you give me a sane theory why they haven't raised already? And how have they "done enough"? They've failed to even hit meager targets or ramp production past 4000. They're losing money selling $60K cars...which will soon run out, the market just isn't that large for cars at that price. Then what?
So in your world, funding is secured and Musk's tweeting is all that can sink Tesla?

Pretty much. Tesla is producing cars pretty much as the markets expected. Tesla will get the money it needs as long as Musk shuts his mouth.

Seems likely musk knew he would have to raise, but framed the discussion in a way so that if/when that happens, it will be marketed as "just some short term cash to get us over the edge profitability."

Musk said on the last call that the plan was to not raise again, and to pay off existing debt with cash flow from operations. I think it is obvious that wasn't/isn't realistic. And he knew that at the time.

But he also knew he could paint a rosy picture of Tesla in terms of profitability in the 3rd quarter, which would then lead to better terms for a raise. So they moved their most valuable orders to the front of the line, batched/rushed production (leading to severe quality and logistics problems), etc. Despite all of this, it's still not clear if Tesla will be profitable in Q3, and we have evidence that it won't be from their last 10-Q

With this thesis that the plan all along was raise after a strong Q3, doesn't that explain why they haven't raised yet? If they are prelim talks already, it shouldn't take 5+ months to work out a deal.

He's totally backed into a corner w/r/t the raise. If he tries to sell equity he will need to offer a huge discount, which will make him look awful publicly and he won't do it.

If he finds some creative bond financing, he'll be paying crushing interest rates as the HighYield bond environment has worsened in the last 3 months, especially in the last few weeks. So instead of a Jan/Mar crush it will be even worse the following year.

Edit: also think the SEC/possible DOJ action is hurting any raise possibility, just a perfect storm against them with rising rates.

I think an equity raise is most likely. Why do you think he will have to offer a huge discount?

TSLAQ seems to be sold on the idea that the #secret is preventing an equity offering, but imo it's more likely the above timeline is what Musk had in mind.

The #secret being data/disclosure that would presumably be catastrophically bad for Tesla if leaked via due diligence review of books required for equity offering

Look at where the CDS is trading, there is a > 50% chance of a default in 5 years. Possible equity buyers are going to want a huge discount to take that kind of risk. 10-20% from current price, which would make Elon look terrible to his current shareholders - "hey guys, i had buyers lined up at $420, but welp, things change and now we're selling a bunch of stock for $220, sorry about that. Shorts will burn....eventually!!1!"

Yeah the $420 tweet was incredibly dumb for lots of reasons. And Musk will for sure have to (and already has) eat some crow from the fallout.

What would the CDS rate be if they were to raise? (I know the probability of a raise is baked into the CDS rate, but still..)

CDS prices will drop on any raise, as the cash will stave off a default/credit event for a while. I don't think an equity raise is possible, Elon would not be able to face the twitter mob and he'd do anything to save face.

I also think a traditional debt raise isn't feasible either. The interest rate would be insane. I expect some type of weird hybrid-new structure type of raise. Convertible bond waterfall super-senior-new-entity that totally crushes the existing bondholders in seniority. Existing bondholders would make considerably less noise on twitter and allow Elon to save some face.

The second you understand how a founder's mind works and how much they hate giving up control, the second you will realize why he does it. This is the only reason that makes sense why Musk is riding so close to the edge.

It's not even about founder's mind... why raise capital when you don't need it yet and you have no reason to believe capital markets would be closed to you? (alternatively, in cases where capital markets are closed to you your firm is probably already failing so no point hedging for closed capital markets)

It's unusual but not dramatically so for founder types like Musk to insist they don't need more money until they really need it. One of the reasons the startup/venture industry developed semi-standardized 1-2 page term sheets was because founder types really do tend to raise capital at the very last minute and they needed the cash yesterday.

They don't need the money right now? That's why they are building cars in tents, stiffing their suppliers and pissing off their customers, because they don't need the money yet...

Building tents is unusual but understandable given time constraints.

Squeezing suppliers and pissing off customers are pretty typical. There is a reason Porter's Five Forces include Supplier and Buyer bargaining powers as critical in determining potential profitability.

With or without the money, there is a way to do things and then there is the way to do things. The latter is obviously lost on them, just look at their qa. Pitching tents to extend floor space is acceptable given the quality isn't undermined, which it clearly is.

Add to that list not paying their taxes on time:
https://www.bloomberg.com/news/artic...s-in-the-state

I think once everyone starts to sue you it's a sign that you have crossed the line on sh***y, but generally accepted business practices.

He did massive dilution for years to keep a comfortable cash cushion and people paid and then stopped dead and stopped paying bills and suppliers during their most critical ramp because....? He really cared about that last 0.5% and not the other 5%?

He actually needs to raise. There is no possible way to avoid that and Musk would know that. He needs to raise billions of dollars to survive the next year alone, billions more for Model Y. It is better to raise (in terms of his dilution) at a stock price of $350+ than at the range of other likely stock prices.

Your theory makes no sense. Hence why I asked for a sane theory. Your "founder's mind" theory require a complete 180 in his prior habits and doing tremendous damage to his business for what? He is either completely insane or he can't raise. I do not believe he is completely insane.

Meanwhile, Tesla is today's "flight to safety" stock while Nasdaq panics sells the most since February. Hilarious stuff.

Doesn't Musk have a history of over-promising and/or lying about future products on the eve of a large raise? Which is what he is likely doing with Q3 #s and future guidance. Sure, he's delaying longer than TSLAQ would like, but there's still enough time to get a deal done.

He's done long term damage to the business by not having enough cash to ramp, for capex, etc. He's acting like under extreme stress (most frauds go nuts near the end). Does this make any sense if he can raise when he wants?