The 10Q is out, and here's a quick to reaction to three important items:
Cash reported at as of June 30 is $3.25B. Subsequent to June 30…
($678M) used to repay credit line
($411M) will be used in 3Q for 2018 note conversions
$2.1B remaining into July
($450M) overseas cash (net amount after repatriation taxes would be available, but TSLA is unlikely to repatriate except under duress/liquidation)
$1.7B effectively available
This is a big drop and is important in light of the fact that (NYSE:I) Tesla's borrowing under the ABL was limited by the value of the assets securing the line and (ii) Tesla has stated it will spend about $1.7B in capex alone for the remainder of 2016. That would leave no liqudity to fund operating losses and cash burn and working capital.
2) Debt Refinance or Restructuring Coming.
Long investors should be very wary of the following disclosure:
"We may also seek to refinance or restructure our existing debt, including our convertible senior notes, through exchanges, repurchases, redemptions and conversions. "
Given the company's mounting losses and cash burn, inability to service any traditional debt beyond the limited asset-based facility already in place, the company's junk rating, and the addition of SolarCity, any such refinance or restructuring is likely to be punitive to common shareholders.
3) Model 3 reservations
Tesla failed to disclose the number of Model 3 reservations as of June 30. Given Musk's use of Twitter to relentlessly hype the number of reservations at various intervals following the 3/31 event, this is inexcusable. Musk and the company have vested the number with significant meaning. So much so that the company saw fit to add a risk factor notifying investors that such reservations can be canceled. So why not just report the actual number at regular intervals, not just self-serving ones, and let investors weigh the information as appropriate.
Disclosure: I am/we are short TSLA.