Tesla loses more than $4,000 on every car sold, but subsidy slurper and crony capitalist extraordinaire Elon Mosk plans to make it up on volume. From Tyler Durden at zerohedge,com:
Last week, following the latest abysmal (if only in GAAP terms) quarter for Tesla, we showed what we thought was without a doubt the most important chart for the company that has taken “story” to the next level: its cash flow, or lack thereof, and the stunning observation that in just the first six months of 2015, Tesla burned $1.1 billion in cash. Its current cash levels? Just $1.2 billion more.
The problem, judging by the collapse in its stock price after its Q2 earnings, others are starting to notice too, such as Reuters. And now that the growth “story” has taken a back seat following the latest guidance cut in deliveries, fears that the company will have to dilute shareholders to keep the “story” afloat, are rapidly emerging. Case in point, Reuters calculation of a fact that was known to most observers but certainly not to retail enthusiasts who “bought the stock just because others bought the stock”, i.e., that Tesla loses about $4000 on ever car it makes.
The Silicon Valley automaker is losing more than $4,000 on every Model S electric sedan it sells, using its reckoning of operating losses, and it burned $359 million in cash last quarter in a bull market for luxury vehicles. The company on Wednesday cut its production targets for this year and next. Chief Executive Elon Musk said he’s considering options to raise more capital, and didn’t rule out selling more stock.
Musk has taken investors on a thrill ride since taking Tesla public in 2010. Now he’s given himself a deadline, promising that by the first quarter of 2016 Tesla will be making enough money to fund a jump from making one expensive, low volume car to mass producing multiple models, and expanding a venture to manufacture electric power storage systems.
Now that might be tricky, because unless like AMZN, Tesla has a seriously underestimated source of profitability (we have yet to hear of the Tesla Cloud), the company has just pigeonholed itself and is willing to trade off its growth “story” for cash burn. Which with nearly virtual certainty, results in about a 30-50% cut to forward multiples.
To continue reading: Tesla Loses More Than $4,000 on Every Car Sold
