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by jonknee 3142 days ago
> Their finances are far from a mess, they are just not what finance people like to see. They have cash on hand and a roadmap to execute on.

In other words, their finances are a mess. Negative free cash flow of $1.4b in the most recent quarter with $3.5b in the bank is cutting it very close. They're going to have to raise a ton more capital or issue debt just to execute on the Model 3, let alone all the other stuff they keep talking about (anyone remember the Solar Roof?). Their recently issued junk bonds are already trading off par, another issue is going to be expensive.
1 comments
dkhenry 3142 days ago
Spending money while building out your main product pipeline is perfectly acceptable to me. How many quarters of runway would you want them to hold on hand? If in six months when their cash on hand gets low they can issue a new round of funding and investors can decide if its worth pumping more money into the company or if they won't be able to turn a profit. This would be the exact behavior you get from any company in a high growth phase, the only difference is most of the time the only people who get a look at the books of these companies are the investment firms who lead crazy valuation rounds since the public doesn't have access to pre IPO startups.
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Tyrek 3141 days ago
That's kind of the point though - it's much more acceptable (to the markets) for a private company to be doing crazy things, low runway, etc, because if the company goes broke, the damage is limited to 'skilled' investors (those with enough means and know-how to get in on the investment). If a public company goes bust (which is the risk here) the damage is much more widespread, and will undoubtedly hit retail investors as well as professionals.
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misterhtmlcss 3141 days ago
I bought a bunch of put options on the cheap, so I'm betting on reckoning next year, but not a bankruptcy.

Based on their valuation being too high for where they are, I'm guessing they'll do a share offering to get cash. This could cause they're shares to tumble and I'll make 400-1200% or not. I'm ok with writing off such a small bet, but wow what a fun ride it'll be to see how this all turns out.

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