This article is not exactly doing the math right. Yes, the total value of Tesla might become negative in 4 months, but it won't have run out of cash at that point.
If Tesla is anything like any other company, it can maintain an accounts payable balance. So that $1.6 billion, as long as money keeps flowing through Tesla, does not have to be paid back. It's simply the balance on it's credit card. It's paying it down every month, and adding new things onto it, just like every other company. This results in a running credit line that effectively stays open forever. Most of it, like your own credit card's first month balance, probably doesn't even have interest on it.
Long term debt is -surprise- long term. So it doesn't have to be paid back in the next two years (that's the usual definition).
If you want to know when capital needs to be raised, this document has a cashflow section. It's not 100% enough to know how the cash-on-the-running-account situation is, but it's certainly a good starting point.
Cash and cash equivalents at end of period: $ 3,084,257 (in 1000)
TLDR is: Tesla has 3 billion in the bank, and is using in it's new fast investment rampup plan for the gigafactory about 250 million per quarter, but let's say that doubles, ok, then we have about 3 years. Given that in that time, some long term debt will become short term debt, let's say further analysis will probably shorten that, but even shortened it will be more than 2 years. So ... 2.5 years ?
Yes it's net worth if you add it all up is negative, just like every other company these days (the 2008 FED recovery plan has made sure that the holdouts didn't hold. They offer 1% or so long term debt to companies, companies took it and, effectively and predictably, paid it out to shareholders. Barring exceptions, every large company has negative value. At least Musk is spending it on infrastructure and research & development). If you're going to refuse to invest in net-negative-worth companies you're going to be missing out on a lot, and even the champions of that approach, like Warren Buffett, don't do it in practice (despite rhetoric to the contrary). Not that they have a real choice, of course, but still.
If Tesla is anything like any other company, it can maintain an accounts payable balance. So that $1.6 billion, as long as money keeps flowing through Tesla, does not have to be paid back. It's simply the balance on it's credit card. It's paying it down every month, and adding new things onto it, just like every other company. This results in a running credit line that effectively stays open forever. Most of it, like your own credit card's first month balance, probably doesn't even have interest on it.
Long term debt is -surprise- long term. So it doesn't have to be paid back in the next two years (that's the usual definition).
http://ir.tesla.com/secfiling.cfm?filingID=1564590-16-26820&...
If you want to know when capital needs to be raised, this document has a cashflow section. It's not 100% enough to know how the cash-on-the-running-account situation is, but it's certainly a good starting point.
Cash and cash equivalents at end of period: $ 3,084,257 (in 1000)
TLDR is: Tesla has 3 billion in the bank, and is using in it's new fast investment rampup plan for the gigafactory about 250 million per quarter, but let's say that doubles, ok, then we have about 3 years. Given that in that time, some long term debt will become short term debt, let's say further analysis will probably shorten that, but even shortened it will be more than 2 years. So ... 2.5 years ?
Yes it's net worth if you add it all up is negative, just like every other company these days (the 2008 FED recovery plan has made sure that the holdouts didn't hold. They offer 1% or so long term debt to companies, companies took it and, effectively and predictably, paid it out to shareholders. Barring exceptions, every large company has negative value. At least Musk is spending it on infrastructure and research & development). If you're going to refuse to invest in net-negative-worth companies you're going to be missing out on a lot, and even the champions of that approach, like Warren Buffett, don't do it in practice (despite rhetoric to the contrary). Not that they have a real choice, of course, but still.