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1/ Short thread on the $TSLA capital raise. $2B total. $650MM equity and $1.35B convertible debt, with greenshoe upsizing of 15% on both.
2/ It prices tonight. Does that reflect confidence? Or caution? I'm with @orthereaboot. That does not exactly suggest confidence.
3/ The convert portion will price with absolutely no regard to fundamentals. It's a purely technical calculation, and convert holders will immediately hedge.
4/ Pricing on the equity portion will be interesting. I'm pretty sure all the Robin Hood retail buyers of late were hoping for a much higher share price than $237, which is the early whisper.
5/ Will the underwriters require $TSLA to reveal its order book? To update guidance? Only in a sane world would that happen. Of this I'm sure: Tesla will badly miss its Q2 delivery guidance, and hard questions will be asked.
6/ Let's remember where we are. InsideEVs estimates for Q1 were 11,925 across all three models. Is Europe any better? Let's check in with @fly4dat:
7/ So, we're at 16k US + Europe, with fewer S & X in the mix than ever, and lower ASPs than ever. And lots of Europe was March spillover. A catastrophic month, and wholly inconsistent with $TSLA Q2 and full-year guidance.
8/ So, it's up to China. That's always a wild card. Let's go crazy and say 8,000 in April. You're at 24k. You're just not going to make it to 90k. You'll need price slashing to get to 80k. Q2 loss secured.
9/ And it's losses as far as they eye can see. $TSLA will lose money in each quarter this year. What's the future hold?
10/ A truly dopey Model Y, for which $TSLA has not even ordered production equipment? Lots of luck with that. Far more compelling compact SUVs already available, and many more to come.
11/ The Shanghai Model 3? If you read the threads of @phoennix10, you'll understand there's no way a drivable car rolls off that line this year. And, in China, with the ferocious competition, explain how Tesla makes money, please.
12/ By the way, $2B is not nearly enough. As @CGrantWSJ observed this morning, it barely covers the working capital hole. Even Cathie Wood said Tesla would need much more: I think I heard $20B over the next few years. Ain't happening, Cathie.
13/ Let's mention Elon's margin debt. We see that the underwriter banks hold $507MM of it. Is that all there is? Not a chance. There was $700MM in 2017, and after that Elon pumped $100MM into Boring Co & donated $40MM to SEC. Plus, that big carbon footprint lifestyle.
14/ Latest proxy offers a clue. Suggests margin debt is $1B, perhaps more. Who holds the balance? Again, given importance of this question, will underwriters require disclosure? Nah. Questions are for little people.
15/ So, today is all about pumping the share price for tonight's pricing. Enjoy the fun while it lasts.
16/ Final note: $TSLA faces truly existential litigation with the funding secured class action. Now tied up in plaintiff lawyer skirmishing, and unlikely to gather much steam for a year or so. But, it's odd how everyone ignores it.
17/ Oh, let's add one more. Want real disclosure? Come to $TSLAQ. @SheepleAnalytic has some real disclosure. RCA = revolving credit agreement (ABL). WA = warehouse deal. Domino Solar is one of those fun scammy SolarCity deals.
