TSLA showing cracks?
08-22-2019
, 08:53 AM
08-22-2019
, 09:03 AM
08-22-2019
, 09:27 AM
08-22-2019
, 10:07 AM
Moody's upgraded Tesla's rating from negative to stable.
"...Tesla has an adequate liquidity profile supported primarily by its $5 billion cash position. After giving consideration for approximately $1 billion in cash needed to fund normal ongoing operations, and $566 million to cover a November 2019 convertible note maturity, Tesla has incremental liquidity of approximately $3.4 billion. This affords the company an important cushion to contend with potential stress arising from softness in US demand, operational challenges accompanying its European and Chinese expansion plans, and the time that will be necessary to implement additional efficiency-enhancing initiatives..."
https://m.moodys.com/research/Moodys...red--PR_407645
Baillie Gifford (owns 7.5% of Tesla) critical of Musk
https://seekingalpha.com/news/349391...ical-elon-musk
Stylish. Where are the sensors? Imperceptible!!! Do these sell direct to consumers or do I have to go through a dealer?
"...Tesla has an adequate liquidity profile supported primarily by its $5 billion cash position. After giving consideration for approximately $1 billion in cash needed to fund normal ongoing operations, and $566 million to cover a November 2019 convertible note maturity, Tesla has incremental liquidity of approximately $3.4 billion. This affords the company an important cushion to contend with potential stress arising from softness in US demand, operational challenges accompanying its European and Chinese expansion plans, and the time that will be necessary to implement additional efficiency-enhancing initiatives..."
https://m.moodys.com/research/Moodys...red--PR_407645
Quote:
Originally Posted by Moody's Investor Service
New York, August 20, 2019 -- Moody's Investors Service ("Moody's") affirmed Tesla, Inc.'s ratings including the B3 Corporate Family Rating (CFR) and Caa1 senior unsecured ratings, and changed the speculative grade liquidity rating to SGL-3 from SGL-4. The outlook changed to stable from negative.
RATINGS RATIONALE
Tesla's B3 CFR reflects its achievement of scale production of the Model 3 after struggling with significant manufacturing and assembly hurdles. As Model 3 output is now in line with Moody's earlier expectations the company should be able to achieve production efficiencies, lower costs, and strengthen automotive gross margins. This progress will be necessary if Tesla's automotive sales are to offset the sizable losses generated by the automotive service operations, and enable it to sustain net profitability. An important contributor to achieving net profit will be the sale of regulatory credits, which represent no incremental cost to the company and fall directly to earnings. We expect these sales, which accounted for over $400 million in revenues/earnings during 2018, will continue to grow as emission regulations become more restrictive in all major markets.
Moreover, Tesla's increased experience with its production processes have significantly reduced the level of capital expenditures needed to support its growth plans, with annual capex falling from approximately $4 billion in 2017 to a current run rate of $1.5 to $2 billion, thus providing a significant boost to expected cash flow. Nonetheless, Moody's still expects the company to generate modestly negative free cash flow during the coming twelve months, probably in the area of $500 million.
Finally, Tesla's liquidity position is now adequate, reflected by the SGL-3. Its $5 billion cash position will afford an important cushion to meet maturing debt obligations through 2021 and to contend with the operational challenges it will face during the coming year.
These challenges include: 1) improving the gross margin of its automotive operations while containing the losses in its solar and auto service businesses; 2) effectively executing the rapid expansion into Europe, where demand seems sound; 3) contending with ongoing US-China trade tensions as the company builds out the Shanghai production facility and launches the Chinese-market Model 3; and, 4) contending with the coming launch of more competitive battery electric vehicles (BEVs) from global automotive competitors.
The stable outlook anticipates that improving operating efficiencies of the Model 3, growing regulatory credit sales, and an adequate liquidity position will provide a sufficient runway to continue undertaking cost cutting initiatives that will improve profitability in the face of aggressive expansion plans.
Environmental, social and governance factors are important elements of Tesla's credit profile. The company's commitment to BEVs, backup battery power storage, and solar power generation provide a strong basis of environmental and social responsibility. Moreover, its ability to generate earnings from the sale of regulatory credits afford it a significant financial benefit. However, Tesla faces important corporate governance challenges. There has been significant turnover at the senior management ranks, including the recent stepping aside of the company's co-founder from day-to-day activities. Actions by Tesla's CEO, Elon Musk, have resulted in conflict with, and intervention by, the Securities and Exchange Commission, and have also contributed to periods of undue confusion within the capital markets regarding Tesla's operational and financial strategy. In addition, Mr. Musk's executive responsibilities with outside ventures such as SpaceX could tax his ability to adequately focus on Tesla's considerable challenges. Tesla's board of directors has not demonstrated meaningful oversight over the CEO's activities, and there are board members who have close personal ties to Mr. Musk. During 2018 a new chairperson was appointed and two additional board members were added. Nonetheless, Tesla retains a very weak corporate governance structure.
Tesla has an adequate liquidity profile supported primarily by its $5 billion cash position. After giving consideration for approximately $1 billion in cash needed to fund normal ongoing operations, and $566 million to cover a November 2019 convertible note maturity, Tesla has incremental liquidity of approximately $3.4 billion. This affords the company an important cushion to contend with potential stress arising from softness in US demand, operational challenges accompanying its European and Chinese expansion plans, and the time that will be necessary to implement additional efficiency-enhancing initiatives.
The rating could be upgraded if Tesla is able to demonstrate sustained profitability and positive free cash flow in the face of rapid expansion plans in Europe and China. The company would also need to maintain an adequate liquidity profile to support a higher rating.
The rating could be lowered if demand for its BEVs begins to soften in the US, or if the company falters in implementing its European or China expansion initiatives. The rating could also be lowered if the company cannot remain on a clear path to strengthening margins in the automotive operations and narrowing losses in its service business.
RATINGS RATIONALE
Tesla's B3 CFR reflects its achievement of scale production of the Model 3 after struggling with significant manufacturing and assembly hurdles. As Model 3 output is now in line with Moody's earlier expectations the company should be able to achieve production efficiencies, lower costs, and strengthen automotive gross margins. This progress will be necessary if Tesla's automotive sales are to offset the sizable losses generated by the automotive service operations, and enable it to sustain net profitability. An important contributor to achieving net profit will be the sale of regulatory credits, which represent no incremental cost to the company and fall directly to earnings. We expect these sales, which accounted for over $400 million in revenues/earnings during 2018, will continue to grow as emission regulations become more restrictive in all major markets.
Moreover, Tesla's increased experience with its production processes have significantly reduced the level of capital expenditures needed to support its growth plans, with annual capex falling from approximately $4 billion in 2017 to a current run rate of $1.5 to $2 billion, thus providing a significant boost to expected cash flow. Nonetheless, Moody's still expects the company to generate modestly negative free cash flow during the coming twelve months, probably in the area of $500 million.
Finally, Tesla's liquidity position is now adequate, reflected by the SGL-3. Its $5 billion cash position will afford an important cushion to meet maturing debt obligations through 2021 and to contend with the operational challenges it will face during the coming year.
These challenges include: 1) improving the gross margin of its automotive operations while containing the losses in its solar and auto service businesses; 2) effectively executing the rapid expansion into Europe, where demand seems sound; 3) contending with ongoing US-China trade tensions as the company builds out the Shanghai production facility and launches the Chinese-market Model 3; and, 4) contending with the coming launch of more competitive battery electric vehicles (BEVs) from global automotive competitors.
The stable outlook anticipates that improving operating efficiencies of the Model 3, growing regulatory credit sales, and an adequate liquidity position will provide a sufficient runway to continue undertaking cost cutting initiatives that will improve profitability in the face of aggressive expansion plans.
Environmental, social and governance factors are important elements of Tesla's credit profile. The company's commitment to BEVs, backup battery power storage, and solar power generation provide a strong basis of environmental and social responsibility. Moreover, its ability to generate earnings from the sale of regulatory credits afford it a significant financial benefit. However, Tesla faces important corporate governance challenges. There has been significant turnover at the senior management ranks, including the recent stepping aside of the company's co-founder from day-to-day activities. Actions by Tesla's CEO, Elon Musk, have resulted in conflict with, and intervention by, the Securities and Exchange Commission, and have also contributed to periods of undue confusion within the capital markets regarding Tesla's operational and financial strategy. In addition, Mr. Musk's executive responsibilities with outside ventures such as SpaceX could tax his ability to adequately focus on Tesla's considerable challenges. Tesla's board of directors has not demonstrated meaningful oversight over the CEO's activities, and there are board members who have close personal ties to Mr. Musk. During 2018 a new chairperson was appointed and two additional board members were added. Nonetheless, Tesla retains a very weak corporate governance structure.
Tesla has an adequate liquidity profile supported primarily by its $5 billion cash position. After giving consideration for approximately $1 billion in cash needed to fund normal ongoing operations, and $566 million to cover a November 2019 convertible note maturity, Tesla has incremental liquidity of approximately $3.4 billion. This affords the company an important cushion to contend with potential stress arising from softness in US demand, operational challenges accompanying its European and Chinese expansion plans, and the time that will be necessary to implement additional efficiency-enhancing initiatives.
The rating could be upgraded if Tesla is able to demonstrate sustained profitability and positive free cash flow in the face of rapid expansion plans in Europe and China. The company would also need to maintain an adequate liquidity profile to support a higher rating.
The rating could be lowered if demand for its BEVs begins to soften in the US, or if the company falters in implementing its European or China expansion initiatives. The rating could also be lowered if the company cannot remain on a clear path to strengthening margins in the automotive operations and narrowing losses in its service business.
https://seekingalpha.com/news/349391...ical-elon-musk
Quote:
Originally Posted by Baillie Gifford
Tesla (NASDAQ:TSLA) stakeholder holder Baillie Gifford lightly suggests Elon Musk step down as CEO of the company in an interview published in a German magazine. The firm's James Anderson points to Musk's style of management and communication history with shareholders as sticking points.
Stylish. Where are the sensors? Imperceptible!!! Do these sell direct to consumers or do I have to go through a dealer?
Last edited by despacito; 08-22-2019 at 10:33 AM.
08-22-2019
, 10:22 AM
08-22-2019
, 11:05 AM
08-22-2019
, 11:11 AM
Quote:
Everything I posted was spot on and I completely agreed with JKC at every point. If VW hadn't given such a rapid contradiction to the story, it was going higher. Even after they contradicted Tesla remained higher until the market bombed. By the time the market opened we had the exact same position (you can't buy puts premarket).
You never were the sharpest tool in the shed.
You never were the sharpest tool in the shed.
You're in the bottom right yeah?
Must be nice.
08-22-2019
, 11:39 AM
08-22-2019
, 05:46 PM