10 Things You Don't Know About Bitcoin But Should [View article]
Mike, Thanks for posting the article. The concept of digital currency is incredibly interesting, but I have serious questions whether Bitcoin will be the long term winner in the race for private digital alternative currencies. The value of Bitcoins have become so volatile, they can't possibly be particularly useful for transacting. Ultimately, to be a legitmate alternative currency, digital currency has to have real world transaction ability. They can't just be a means of speculation, and that's all bitcoins are right now...
Thanks for the comments AAM. It's great having software engineers like yourself able to comment. I like the approach Ripple uses of allowing a private company to be the sole manager of the open network. You're right about it also being distributed, but downloading the client doesn't require the massive block chain and their transaction speed is near instantaneous and free, which are important differentiators. The guys running Ripple are the real deal. I'd be shocked if their code quality didn't reflect that, but you never know.
Tesla's Not-So-New Manufacturing Model [View article]
I suspect the responsive Mr. Funk may not respond to the observation that Tesla is up over 20% in the month following the publication of his apocalyptic predictions of an imminent capital structure collapse.
AAM, There is only so much that bitcoin can do given that they have a wedded to the peer-to-peer architecture. There is a private company still in beta called Ripple, you may have heard of them. I think they have a better software infrastructure and have learned from the bitcoin challenges. Rather than use the peer to peer or distributed infrustucture, they created an open source cooperative single leger to keep track of the debits and credits. They are giving away free 'ripples' to bitcoin users, which I think is really smart. They have a number of developers on the team that were part of the original bitcoin people so really know what they're doing. Ripple may not be the winner, but I think that a compnay like that will be more competitive that bitcoin. The bitcoin infrastructure is about to cave in under its own weight.
Bitcoins are only as good as the software underlying the platform. I'm convinced there are some fatal software issues with the platform. Transfer syncing is way to slow, it's too distributed, yet not open enough, in that it's hard for 3rd parties to create bitcoin apps and plug ins. The idea of math-based software currency is incredibility exciting, which is why it's taking off notwithstanding.
Personally, I think you'll see a private version be the winner in the space, where scalability and openness can be addressed.
Tesla's Not-So-New Manufacturing Model [View article]
Steve -- Look, you have totally misrepresented the DOE Loan all in an effort to make readers believe that Tesla's capital structure is somehow unstable. This isn't some little technical point that you can now sweep under the table. Frankly, someone at SA should sanction you or at least make you provide backup for any statements in future articles.
In response to your latest comments:
"Can you disclose whether you are getting paid for this?" I am not being paid.
"Seems unlikely a partner at a large law firm has this much time to spend on a relatively small column." It didn't take me more than 20 minutes to do the diligence you should have done, and I find it interesting. Yes, I'm a nerd ... unfortunately for you.
"How does Mr. Musk retain stock if he is dead?" His interest is largely held through a trust and the trust could very well continue to hold it even if Musk dies.
So let's sum up what you said about the DOE loan agreement in an effort to leave readers with the false impression that Tesla's loan agreement destabilizes the company...
Do the DOE loan agreements prohibit the issuance of stock by Tesla? Steve says yes. Answer is no.
Does the DOE loan accelerate if Musk steps down or is terminated? Steve says yes. Answer is no.
Can the DOE loan be prepaid early from the proceeds of a stock deal? Steve says no. Answer is yes.
Did the DOE have to amend the agreements to permit the financing last September? Steve says yes. Answer is no.
Does the DOE loan accerate if Musk dies? Steve says yes. Answer is probably no, but could be possible depedning on Musk's shares are distributed.
Now the loan agreement issues are behind us. Please no more misrepresentations about the loan agreement and Tesla's capital structure.
Tesla's Not-So-New Manufacturing Model [View article]
Steve,
The language you cite is just standard risk factor disclosure. It does not say the DOE has a block on equity financing. I just read the underlying agreements. They don't have one.
"In addition the loan is callable if Elon Musk quits or dies." I didn't see that in the documents. I looked for it. The closest provision I saw was a "Change in Control" default which says the loan is callable if someone acquires 35% of the company. So if Musk died and all his assets went to one person (they probably wouldn't) it's possible that provision could be triggered. But Musk quitting wouldn't trigger it. What is the section reference of the loan agreement provision that accelerates the loan upon Musk's death or termination?
Tesla's Not-So-New Manufacturing Model [View article]
Steve, "Part of their loan modification last September also authorized Tesla to issue more stock."
I just read the waiver. Your description is totally false. It was a waiver of a quick ratio covenant for Q3 of last year. It had nothing to do with an equity financing. You shouldn't make stuff up.
"Neil is right, the government basically has the clause so they are in control of fund raising."
Totally wrong again. I read the DOE Loan Arrangement and Reimbursement Agreement. Again. Your description is totally false. In no way does the agreement prevent the company from doing an equity financing and paying off the DOE debt. Just the opposite. It says that if Tesla does an equity financing it MUST pay off some of the DOE debt. Again, please quit making stuff up.
"...the DOE will make sure they get their money before common shareholders in the event of bankruptcy."
No #&*T Sherlock. That's the rights they have by operation of law. That's true of all bank debt, notes bonds, trade credit ... you name it. Equity gets paid last in a bankruptcy, which generally means not at all.
Tesla's Not-So-New Manufacturing Model [View article]
"Market cap has little to do with ability to pay off a loan. Especially when that loan has restrictions against issuing new stock."
I don't think you have the facts right. Tesla issued a lot of stock in their IPO after the loan was incurred, in violation of your supposed restrictions. Lenders always like equity coming in beneath them. Tesla doesn't have a debt problem.
Tesla's Not-So-New Manufacturing Model [View article]
"They are constrained from raising more cash as long as the DOE loan is outstanding (unless they renegotiate this week)."
Steve, now you're losing credibility. Their share price has been steadily rising since the IPO. Their DOE loan isn't that large relative to their market cap. This is not a company about to hit a financial wall. If it were, it's stock price would be behaving differently. At these share price levels, they can issue stock any time they want and prepay the entire DOE loan. They don't do that because they like the low rate subsidy.
Tesla's Not-So-New Manufacturing Model [View article]
"They can have 200,000 units/ year capacity within several years." I don't buy it. None has an EV with anywhere near the range of the Tesla S anywhere near production. Tesla definitely has some secret sauce in the battery area, which will be tough to duplicate.
By the way, GM's CEO was quoted last year as saying that if only they could get batteries with a 200 mile range, it would be a game changer...
Tesla's Not-So-New Manufacturing Model [View article]
"Other competitors will not sit and wait while that happens."
They have so far. How many years will it be before any of those competitors is in a position to introduce an electric competitor? 5 years? 10? That's quite a jump for Tesla.
And it's not just the 900k luxury segment, as you call it. Tesla will have an SUV, a new sports car, and a mid-priced sedan. Given the success of the Model S, it wouldn't surprise me if they were selling 1m cars annually, once other models are released.
Tesla's Not-So-New Manufacturing Model [View article]
Great comment Barb. It'll be interesting to watch what happens when the incumbent manufacturers finally realize Teslas are simpler cars with higher margins delivering a better automobile experience with lower cost of ownership. They'll probably all figure it out at the same time and too late. They'll beg to acquire and when that doesn't happen, they'll beg to license the technology.
Bitcoin Crashed. Again [View article]
10 Things You Don't Know About Bitcoin But Should [View article]
Thanks for posting the article. The concept of digital currency is incredibly interesting, but I have serious questions whether Bitcoin will be the long term winner in the race for private digital alternative currencies. The value of Bitcoins have become so volatile, they can't possibly be particularly useful for transacting. Ultimately, to be a legitmate alternative currency, digital currency has to have real world transaction ability. They can't just be a means of speculation, and that's all bitcoins are right now...
Bitcoin Crashed. Again [View article]
Tesla's Not-So-New Manufacturing Model [View article]
Bitcoin Crashed. Again [View article]
There is only so much that bitcoin can do given that they have a wedded to the peer-to-peer architecture. There is a private company still in beta called Ripple, you may have heard of them. I think they have a better software infrastructure and have learned from the bitcoin challenges. Rather than use the peer to peer or distributed infrustucture, they created an open source cooperative single leger to keep track of the debits and credits. They are giving away free 'ripples' to bitcoin users, which I think is really smart. They have a number of developers on the team that were part of the original bitcoin people so really know what they're doing. Ripple may not be the winner, but I think that a compnay like that will be more competitive that bitcoin. The bitcoin infrastructure is about to cave in under its own weight.
Bitcoin Crashed. Again [View article]
Personally, I think you'll see a private version be the winner in the space, where scalability and openness can be addressed.
Tesla's Not-So-New Manufacturing Model [View article]
In response to your latest comments:
"Can you disclose whether you are getting paid for this?" I am not being paid.
"Seems unlikely a partner at a large law firm has this much time to spend on a relatively small column." It didn't take me more than 20 minutes to do the diligence you should have done, and I find it interesting. Yes, I'm a nerd ... unfortunately for you.
"How does Mr. Musk retain stock if he is dead?" His interest is largely held through a trust and the trust could very well continue to hold it even if Musk dies.
So let's sum up what you said about the DOE loan agreement in an effort to leave readers with the false impression that Tesla's loan agreement destabilizes the company...
Do the DOE loan agreements prohibit the issuance of stock by Tesla? Steve says yes. Answer is no.
Does the DOE loan accelerate if Musk steps down or is terminated? Steve says yes. Answer is no.
Can the DOE loan be prepaid early from the proceeds of a stock deal? Steve says no. Answer is yes.
Did the DOE have to amend the agreements to permit the financing last September? Steve says yes. Answer is no.
Does the DOE loan accerate if Musk dies? Steve says yes. Answer is probably no, but could be possible depedning on Musk's shares are distributed.
Now the loan agreement issues are behind us. Please no more misrepresentations about the loan agreement and Tesla's capital structure.
Tesla's Not-So-New Manufacturing Model [View article]
The language you cite is just standard risk factor disclosure. It does not say the DOE has a block on equity financing. I just read the underlying agreements. They don't have one.
"In addition the loan is callable if Elon Musk quits or dies." I didn't see that in the documents. I looked for it. The closest provision I saw was a "Change in Control" default which says the loan is callable if someone acquires 35% of the company. So if Musk died and all his assets went to one person (they probably wouldn't) it's possible that provision could be triggered. But Musk quitting wouldn't trigger it. What is the section reference of the loan agreement provision that accelerates the loan upon Musk's death or termination?
Tesla's Not-So-New Manufacturing Model [View article]
"Part of their loan modification last September also authorized Tesla to issue more stock."
I just read the waiver. Your description is totally false. It was a waiver of a quick ratio covenant for Q3 of last year. It had nothing to do with an equity financing. You shouldn't make stuff up.
"Neil is right, the government basically has the clause so they are in control of fund raising."
Totally wrong again. I read the DOE Loan Arrangement and Reimbursement Agreement. Again. Your description is totally false. In no way does the agreement prevent the company from doing an equity financing and paying off the DOE debt. Just the opposite. It says that if Tesla does an equity financing it MUST pay off some of the DOE debt. Again, please quit making stuff up.
"...the DOE will make sure they get their money before common shareholders in the event of bankruptcy."
No #&*T Sherlock. That's the rights they have by operation of law. That's true of all bank debt, notes bonds, trade credit ... you name it. Equity gets paid last in a bankruptcy, which generally means not at all.
Tesla's Not-So-New Manufacturing Model [View article]
I don't think you have the facts right. Tesla issued a lot of stock in their IPO after the loan was incurred, in violation of your supposed restrictions. Lenders always like equity coming in beneath them. Tesla doesn't have a debt problem.
Tesla's Not-So-New Manufacturing Model [View article]
Steve, now you're losing credibility. Their share price has been steadily rising since the IPO. Their DOE loan isn't that large relative to their market cap. This is not a company about to hit a financial wall. If it were, it's stock price would be behaving differently. At these share price levels, they can issue stock any time they want and prepay the entire DOE loan. They don't do that because they like the low rate subsidy.
Tesla's Not-So-New Manufacturing Model [View article]
By the way, GM's CEO was quoted last year as saying that if only they could get batteries with a 200 mile range, it would be a game changer...
Tesla's Not-So-New Manufacturing Model [View article]
They have so far. How many years will it be before any of those competitors is in a position to introduce an electric competitor? 5 years? 10? That's quite a jump for Tesla.
And it's not just the 900k luxury segment, as you call it. Tesla will have an SUV, a new sports car, and a mid-priced sedan. Given the success of the Model S, it wouldn't surprise me if they were selling 1m cars annually, once other models are released.
Tesla's Not-So-New Manufacturing Model [View article]
Tesla's Not-So-New Manufacturing Model [View article]