Thoughts on Tesla Financial Health and Future Challenges
Tesla Bonds have been under pressure, lately. This may be a problem in case the Company will need additional funding this year.
The table below provided by Bloomberg, shows the evolution of Tesla 2025 Bond Yield.
The Yield went up quite a lot during the last month, that means the price of the Bond is going down. As of this week, the Interest Rate that Tesla may pay for a new Bond Issue may hover around 7.5%.
An additional concern, according to The Economist, is that Tesla has 1.2B USD of Convertible Bonds that will mature during the next months. Refinancing at a competitive interest rate may be difficult if there will be a widening of the spread on the High Yield Credit Market.
As Elon Musk said several time, the best way to reduce the concern from Bond Vigilantes about Tesla Financial Health is to hit the Production Goal for the Tesla 3.
I think Tesla is counting on the Model 3 in order to increase future revenues and to justify the high stock valuation. On top of that, increasing revenues will help improving the Cash Flow of the Company.
The biggest focus of the Company is now to start hitting their Weekly Production Goal of 5,000 Vehicle per week for the Tesla 3.
The table below provided by Bloomberg, shows the evolution of Tesla 2025 Bond Yield.
The Yield went up quite a lot during the last month, that means the price of the Bond is going down. As of this week, the Interest Rate that Tesla may pay for a new Bond Issue may hover around 7.5%.
An additional concern, according to The Economist, is that Tesla has 1.2B USD of Convertible Bonds that will mature during the next months. Refinancing at a competitive interest rate may be difficult if there will be a widening of the spread on the High Yield Credit Market.
As Elon Musk said several time, the best way to reduce the concern from Bond Vigilantes about Tesla Financial Health is to hit the Production Goal for the Tesla 3.
I think Tesla is counting on the Model 3 in order to increase future revenues and to justify the high stock valuation. On top of that, increasing revenues will help improving the Cash Flow of the Company.
The biggest focus of the Company is now to start hitting their Weekly Production Goal of 5,000 Vehicle per week for the Tesla 3.
During the last month they made quite a lot of progress but still short of the target of 5,000 vehicle per week.
Let's hope that the Company will succeed in the rump-up of the Model 3.
In my opinion, Mr Musk did something very notable, even tough he may not be able to succeed with Tesla, he has been able to apply pressure on the big Car Makers forcing them to catch up with the Electric Vehicle Business.
In my opinion, Mr Musk did something very notable, even tough he may not be able to succeed with Tesla, he has been able to apply pressure on the big Car Makers forcing them to catch up with the Electric Vehicle Business.
I really hope that the increase of the Fed Funds Rates during the next months will not put too much strain on the Credit Markets because Tesla still needs quite a lot of Funding in order to adjust their production from a Niche Market, to a Mass Market.
Let's monitor the situation during the next months
Let's monitor the situation during the next months
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