Seeking Alpha
  • sa_member_F5 Key
    $TSLA $SPY after reviewing SCTY's shenanigans, I revisted Tesla's Balance Sheet. At 2013 YE, Tesla had 24.25% LTD. And total assets $2.4B
    3/31/14
    Reply (39)
    • sa_member_F5 Key: Then [they] added $2.3 billion in the last month. Thus, bring the company to 100% debt (but, we don't forget how Tesla has used the same
      3/31/14
    • sa_member_F5 Key: trick SolarCity uses, which is to account it's cars as leases and consider them assets.) Albeit, they do consider the vehicle less the
      3/31/14
    • sa_member_F5 Key: guaranteed value as a liability, but by doing this the company can leverage itself up.) / I can't wait to see the Q1 balance sheet, as this
      3/31/14
    • sa_member_F5 Key: company is not building cash, but rather using the market value of leases to prop up its assets. VERY-VERY dangerous. I can't emphasize
      3/31/14
    • sa_member_F5 Key: this enough on how dangerous this is. And in my opinion it is a black hat trick in accounting, as the balance sheet does not represent
      3/31/14
    • sa_member_F5 Key: actual costs, but rather a value based upon one's opinions or assumptions. / This little trick is what could topple both SCTY and TSLA.
      3/31/14
    • sa_member_F5 Key: That's all for now, but I do welcome comments on this topic (leave all Kool-Aid driven comments at the door, thanks)
      3/31/14
    • sa_member_F5 Key: Companies that have a 89.78% long-term debt ratio don't last long. http://bit.ly/1ghwGK7
      3/31/14
    • sa_member_F5 Key: Even further, why did Tesla feel it was necessary to go it so big all of a sudden? Raising $2.3 billion for some future project that hasn't
      3/31/14
    • sa_member_F5 Key: been announced yet seems odd. It's not like they have put that money aside and won't touch it until the project is real. - I guess
      3/31/14
    • sa_member_F5 Key: the money will be used for covering the R&D for new models, and losses of existing models. (Essentially, the money from bond holders
      3/31/14
    • sa_member_F5 Key: will be used for other items.) But this too will spark an uproar, so maybe Tesla says they will go it alone on the GigaFactory. But in the
      3/31/14
    • sa_member_F5 Key: meantime you have a company that is 90% LTD ratio. And if accounting scandals at Solar City carry over to Tesla, then people might start q..
      3/31/14
    • sa_member_F5 Key: questioning Tesla's accounting, which if they mess with the assumption used on Operating LEases, then the company could be all debt, and sha
      3/31/14
    • sa_member_F5 Key: shareholder equity is zero. That would be amazing! The market cap would be $30B, but the balance sheet equity is zero. (LOL). anybody else
      3/31/14
    • sa_member_F5 Key: see the ludicrousness in these two opposites happening at the same time. So what happens here going forward? Tesla has to have blowout #'s
      3/31/14
    • sa_member_F5 Key: and generated cash flow, or it hiccups and loses more money. Maybe Tesla went bankrupt at the same time it issued the $2.3 B and we all just
      3/31/14
    • sa_member_F5 Key: don't know it yet. All very interesting thoughts, but if Musk can run his company into the ground before (no cash) why can't he do it again.
      3/31/14
    • sa_member_F5 Key: Being at 90% LTD Ratio is definitely not where you want to be. / If I was a shareholder right now I would be pulling my hair out about mgmt
      3/31/14
    • haaggus: I'm a shareholder, not pulling my hair out. 2015-2016 you don't think TSLA will be higher than it is right now?
      3/31/14
    • sa_member_F5 Key: Haaggus: No. and here's why = companies that don't create cash flow [profits] can only survive as long as new investors give them money.
      4/1/14
    • sa_member_F5 Key: and with this recent debt raise by Tesla for $2.3 B they are tapped out on the debt side big time. Also new equity is a
      4/1/14
    • sa_member_F5 Key: big deal [difficult] since they have so much debt now on the balance sheet. Thus, if Tesla can't produce huge profits (cash)
      4/1/14
    • sa_member_F5 Key: by using this $2.3 B then the game is over. No one will give them anymore money. So with 3 huge R&D expense coming up, basically they are
      4/1/14
    • sa_member_F5 Key: squeezed. (1) R&D expense for new models and factory/ (2) Investment for existing line expansion as they are at capacity/ (3) GigaFactory
      4/1/14
    • sa_member_F5 Key: So essentially they boxed themselves in and don't even know it. That's what happens with a no profit company / the music stops when new
      4/1/14
    • sa_member_F5 Key: investors can't/won't come in anymore.
      4/1/14
    • sa_member_F5 Key: The way it is supposed to work is a company grows and generates profits. Those profits are used in combination with new equity
      4/1/14
    • sa_member_F5 Key: and debt (but no too much debt). And since you have rolling cash from past sales the demand on this new equity and debt is not as great.
      4/1/14
    • sa_member_F5 Key: But unfortunately, Tesla did not have this profit from the start. So essentially all investors have been building up a zombie company.
      4/1/14
    • sa_member_F5 Key: The problem began when Tesla's business model was not able to be profitable from the beginning. And the VCs knew this. But the story
      4/1/14
    • sa_member_F5 Key: got told over and over that things will change once they grow. And still they have not changed, have they? Is Tesla throwing off huge cash?
      4/1/14
    • sa_member_F5 Key: No. And that's the problem. / P.S. I like Musk, as he has done his best, but basically I don't believe in the financials,
      4/1/14
    • sa_member_F5 Key: especially when the company is 90% LTDR.
      4/1/14
    • sa_member_F5 Key: If Tesla had done it the right way, and the business model was proofed early on, or very very close to being profitable,
      4/1/14
    • sa_member_F5 Key: then They wouldn't have all these excuses like the battery is too expensive and then a need for $2.3B to fix it. /it's bonkers,but fun2watch
      4/1/14
    • sa_member_F5 Key: / a perfect example of how a company usually does it is Google. Look at them, they went the same VC route, then public, n throw off hugeCASH
      4/1/14
    • sa_member_F5 Key: I don't hear any excuses from Google. Do you?
      4/1/14
    • sa_member_F5 Key: being abundantly clear. everything said above is "in my humble opinion", thanks.
      4/2/14