Tesla goes back to square one: where will it get its cash?
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Tesla goes back to square one: where will it get its cash?

It’s been one heck of a month for Tesla. The company has spent the last few weeks in limbo: is it going private? If so, who’s buying? And would it be a good or a bad thing, anyway? Now, we know the answer to the first of those questions, and it makes the second and third redundant: Tesla will remain a publicly traded company.

After a wild 30 days, Telsa’s share price is up by 4%

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Source: Yahoo Finance

With the evaporation of the most pressing story surrounding Tesla, observers are beginning to tread old ground. Embattled CEO Elon Musk insists that the company will not need to raise any more capital this year. Investors aren’t so sure: speculatively, they say, where will funding come from if it is needed?

According to most analysts, Tesla has a mountain of assets it could leverage for cheap credit. It could, they say, pull a Ford and put its logo as collateral. If so, brand consultancy Interbrand says, it could be valued at around $4 billion.

Nonetheless, the general opinion is that Tesla would pursue other options before it put its brand or other intellectual property on the block. That still leaves it plenty of options: for example, its manufacturing plant in Fremont, California – or its huge Nevada battery factory.

This, of course, assumes that Elon is wrong, and more cash will be required. The thing about Mr. Musk is that he’s both a genius, and an eccentric. That makes him hard to gauge. He has managed to pull off incredible feats in the past, but his public behavior can sometimes seem… erratic. In regards to that last point, anyone who has been following his Twitter feed will have seen plenty of examples over the last few weeks.

Still, as we found out when the company reported earnings, Tesla is actually hitting its production targets at the moment. More than anything else, this fairly boring fact is the really important narrative when it comes to Tesla – but will it be enough?

Disclosure
Dominion holds Tesla in its Global Trends Luxury Fund.


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