Is This Why Elon Musk Is Talking Down His Stock Price
In our view, TSLA desperately needs money now; yet, at ~$700/shr, there’s limited demand from institutional investors for the type of raise ($4-$5bn) they need to do. So… Elon Musk needs to get the stock price down before he potentially trips debt (etc.) covenant levels on actual cash on hand, or has to issue a going concern alert.
Every week Fremont is down, TSLA burns $300mn. And, based on reports from the Chinese media, GF3 (i.e., TSLA’s Shanghai plant) sources just 30% of its parts from Chinese producers (the rest come from Fremont). We’re hearing, from credible checks, that the China Communist Party (“CCP”) is becoming "agitated" by TSLA's delays to source more parts from Chinese companies (i.e., TSLA is bidding too low); and, as a result, the CCP is pushing TSLA to big price cuts, again, on made-in-China (“MIC”) SR+/LR models as soon as July (apparently, this is being pushed by CCP ministries) – TSLA has already cut the price on it’s MIC Model 3 SR+ car by -23.7% YTD.
Thus, with the shelter-in-place in Almeda County (where TSLA’s GF2 is located) extended to June, TSLA may need to idle its Shanghai plant in June. We est. this would cost TSLA ~$150mn/week.
zerohedge.com |
