Thread by @TeslaCharts

1/ As a service to my loyal followers, I present a quick analysis of what the credit markets are telling us about $TSLA's future. H/T to @glenntongue for being patient with my amateurish questions. $TSLAQ

2/ We begin with a look at the long-term liabilities of $TSLA as shown in the Q1-2019 10Q. The benchmark bond was issued in 2017 and $1.8B comes due in August of 2025 $TSLAQ

3/ It current sells for $81.88 and has a coupon of 5.3%. $TSLAQ

4/ Which means it has a yield to maturity of 9.2%, which is remarkable for a company with $TSLA's market cap. $TSLAQ

5/ That yield of 9.2% is more than 700 basis points higher than comparable treasury notes. The credit market is questioning $TSLA's solvency. Big time. $TSLAQ

6/ The credit default curve has spiked recently. I'm no CDS expert, but I know enough to know that a 5 year CDS of more than 700 is no bueno. $TSLAQ

7/ The five year CDS has spiked hard since the raise. It is near an all-time high. $TSLAQ

8/ How bad are these numbers? Let's compare them to $GM, an automaker with EV offerings and an autonomy division. The closest bond to $TSLA's benchmark is a $500MM note that matures in April of 2025. It is priced at $100.5 with a coupon of 4%. $TSLAQ

9/ Which gives it a yield to maturity of just 3.9%. $GM $TSLAQ

10/ And a spread to treasuring of only 177 basis points (compared to >700 for $TSLA). $GM $TSLAQ

11/ Here is the CDS curve for $GM. The five year CDS is only 145. $TSLAQ

12/That five year CDS is in the middle of where it has traded in the past year. Clearly, the credit markets are screaming about $TSLA.

And yet, $TSLA's equity is valued at a price-to-sales ratio of 1.5 versus only 0.34 for $GM.

$TSLAQ

13/ Moving on, and to quote @Jkylebass, a rolling loan collects no loss. $TSLA has a $165MM term loan due in June, and presumably after the recent raise they will pay this note on time and in full. $TSLAQ

14/ Now things get very interesting. $TSLA has a $566MM SolarCity convertible bond due on November 1, 2019. $TSLAQ

15/ This bond has a conversion price of $759 a share, so the option value is effectively worthless, and it pays a small coupon of only 1.625%. You can treat this like a regular straight bond. $TSLAQ

16/ The bond trades at $94 as of Friday, down substantially since the raise. $TSLAQ

17/ Which gives it an amazing yield to maturity of 16.8%! $TSLAQ

18/ And a ridiculous spread to treasuries of 1,445 bp! What is the credit market telling us about $TSLA's plans for SolarCity? Will they try to isolate SolarCity from the mother ship? $TSLAQ

19/ Let's compare that to a mother ship convertible bond, this $1.38B note due in March of 2021. $TSLAQ

20/ It has a conversion price of $360 per share, so there is some option value. It trades at $90.75 and the option is modeled out at $2.4, so the straight bond is about $88.35 of that value. Note the implied spread. $TSLAQ

21/ Here is the one-year chart as well. Like all of $TSLA's credit, it has traded lower since the raise. $TSLAQ

22/ Here are the relevant numbers for the most recent $1.84B convert sold as part of the raise. $TSLAQ

23/ The drop from ~105 at issue to 87.75 on Friday is from a combination of the stock price drop (lowering the value of the embedded call option) and the deteriorating credit confidence in $TSLA. $TSLAQ

24/ Finally let's note that $TSLA has other big bills to pay. Despite the sales and production decline observed in Q1, its accounts payable plus accrued liabilities stayed flat at $5.5B. The March 31 $5.5B was probably a little more urgent than the December 31 $5.5B, no? $TSLAQ

25/ So there you have it. $TSLA credit markets are screaming solvency risk, while the equity still sells at 4.4 times the valuation of $GM. Trade carefully. TC out. $TSLAQ

*currently