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1/ Peeps. $TSLAQ hasn't cut back on capex (below maintenance levels) because it has discovered a magic bullet. It has cut capex because it is out of money.
2/ Since its 2010 IPO, Tesla has raised approximately $9.25 bil from either equity or bond offerings. That number does not include the $400mm or so raised from employee option plans. Total capex spend since the IPO is slightly more than $10bn.
3/ In 2017, Tezzla snookered bondholders into two transactions totaling $2.775bn in proceeds. A $977.5mm convert offering in March and the $1.8bn HY comedy show in August.
4/ Since the HY deal closed in August, Tezzla has spent a total of $2.88bn in capex, including the $325mm spent in 4q18. Since they don't truly generate internally generated cash flow, they MUST turn to external sources.
5/ They obviously make use of their ABL to fund inventory buildout. They utilize the lease facilities as another way to trade cash now for less cash later. But they are pretty close to tapped out on the ABL.
6/ If you believe they are truly generating positive sustainable EBITDA, they have carveouts that could enable them to issue up to $2.0bn more in debt. I would say the Model 3's sitting in Chicago lots have a better chance of bricking than Tezzla does of doing another bond deal.
7/ They are cutting capex because they have no choice. The Secret is keeping them out of public markets. Hiring Doogie Howser as CFO won't help them access public markets either, Secret or no Secret.
So Musk and Doogie are now the Donnie Brasco's of the car world. Knocking over parking meters and scrounging for nickels. Real growth companies have access to capital markets, spend for grow, and actually have plans to do so.
*spend for growth*
