1/ There's this ugly rumor out there that SpaceX, besides being squeezed down to $250MM (from $750MM), borrowed at LIBOR + 450 instead of (as reported) 425. Well, actually, more than a rumor. Quite well sourced. What does this tell us about $TSLA?
2/ I would offer to show you the SpaceX Offering Memorandum but, oddly, it's being kept under lock & key. That's a first for me.
3/ So the most all the king's horses & all the king's men could squeeze out of Wall Street for SpaceX on a debt offering - the only debt it has, hence senior secured by definition - was $250MM. And yet $TSLA fanboys say the company is worth, what, $15B, $20B, $25B. To the moon!
4/ In other words, it's now apparent SpaceX is a money-losing enterprise, and the creditors feared that $250MM was about all they could be certain of walking away with once the liquidators knocked on the door.
5/ And, equity money appears to have had enough, after endless rounds of equity raises. Hey, don't forget, equity is free. If you're losing money & burning cash, equity is the first choice.
6/ So maybe, just maybe, @elonmusk's sick & twisted antics are starting to worry Wall Street. Smoking a blunt on TV and hanging with Grimesz & Azealia, with all the rumors of coke & LSD, and now having attracted NASA's attention, were perhaps not the best ideas.
7/ Or perhaps it's simply his penchant for endlessly returning with his begging cup as he burns through cash & loses money. It started to get old for SpaceX investors, especially as it's now clear those reusable rockets aren't so reusable when you factor in reconditioning costs.
8/ Back to $TSLA. For 2019, the company needs, realistically, $5B in CapEx, and it needs it now. $2B per year in maintenance CapEx, and the rest to continue developing & testing its new products. Because, let's face it, the S and X are about to become period pieces
9/ Remember, Musk says he's going to develop & test the Model Y and start producing it (cough, cough) in late 2020. $TSLA has already taken $250k deposits on the Roadster 2 (note to deposit makers: the money is not in an escrow account, and will be quite helpful on March 1).
10/ Then there's the semi, for which deposits also have been taken. And, moving up into a higher level of Musk BS, there's the solar roof tiles, the $TSLA pick-up, the China factory (@Andreas_Hopf recently visited the site; there's, umm, not much there...)
11/ Yeah, I know, decent Q3 result. It would justify a market cap of, say, $7B. But $TSLA achieved it by loading Q3 costs into Q2 & Q4, and pulling every accounting lever known to man. Plus, harvesting most of its high ASP Model 3 order book while burning through the backlog.
12/ $TSLA is spending just about nothing on growth CapEx. That's been true all year. Badly needed are more Superchargers, Service Centers, and of course new products.
13/ Things get really tough for $TSLA in Q1. US subsidies slashed in half, after demand has been pulled forward. High ASP Model 3 backlog completely gone. Netherlands subsidies gone. And, it appears, EU homologation has not yet happened.
14/ The fate of SpaceX's debt raise, featuring first the Goldman Sachs exit, then the downsizing, and finally (if rumor is to be believed) the loan shark rate of LIBOR + 450, does not bode well for the badly needed $TSLA capital raise.
15/ And note that I didn't even mention the pending investigations by the SEC and DOJ, or $TSLA's on-going problems with California health & safety regulators, or the tsunami of complaints about hideous defects in the Model 3.
I should note that The Wall Street Journal this morning is reporting the loan was downsized from $500MM, not $750MM. Still a big cut, but I want to get the facts right. Checking further. You should assume for now WSJ has it right & I have it wrong.
More color. The deal started at $500MM. After GS exited stage left, & BofA took over marketing, BofA upsized it to $750MM. Which, of course, didn't work out so well.
