@Spring19TSLACFO

[@Spring19TSLACFO @spring19tslacfo]

A restrictive short term policy is also indicated in Tesla’s ratio of current assets to revenues of 0.26(from 2018 data). The shortage costs of this policy have been exhibited in recent operations, as we continually fail to deliver vehicles. #Fin2209 @ProfLowell

[@Spring19TSLACFO @spring19tslacfo]

@ProfLowell #Fin2209 Although management doesn’t seem to be worried, Tesla keeps a relatively low amount of liquid cash, indicating a restrictive short term policy. This can lead to financial distress; the large amount of debt that was recently paid off ate 1/3 of cash on hand...

[@Spring19TSLACFO @spring19tslacfo]

@ProfLowell #Fin2209 Tesla’s cash flow is financed prominently through debt, specifically long term. The lower interest rates on LTD benefit Tesla right now as we push to turn a profit to pay this debt later. In the past years, most of this financing has been used in capex.

[@Spring19TSLACFO @spring19tslacfo]

@ProfLowell #Fin2209 Tesla has a unique strategy in short term financing in the fact that a good portion of cash comes from customer deposits on vehicles. In 2018, Tesla recorded customer deposits as $792,601,000 on the balance sheet.

[@Spring19TSLACFO @spring19tslacfo]

@ProfLowell #Fin2209 Elon Musk is known to be wary of raising capital, especially through equity. Distributing new equity would dilute stock prices, which have already seen a dramatic decrease since last quarter.

[@Spring19TSLACFO @spring19tslacfo]

@ProfLowell #Fin2209 In past years, our negative cash flow has forced us to raise capital through debt and equity offerings. Paying off debt this year wiped out a good percentage of our cash. Last year, our equity increased by about 700 mill, and may increase this year as well.

[@Spring19TSLACFO @spring19tslacfo]

@ProfLowell #Fin2209 Tesla’s initial IPO in 2010 raised $226 million. Since then, Tesla has raised $15.1 billion through 31 rounds of post IPO stock and bond offerings, the latest of which was on March 8th.

[@Spring19TSLACFO @spring19tslacfo]

#fin2209 @ProfLowell The lawsuit claimed that shareholders were purchasing “artificially inflated” shares because Tesla executives failed to disclose that the company was “woefully unprepared” for the model 3 production increase. https://t.co/3fGiGx0unX

[@Spring19TSLACFO @spring19tslacfo]

#fin2209 @ProfLowell Shareholders are turning on Tesla and it’s not because of our zero dividend payout policy. A security fraud lawsuit brought by shareholders was just dropped by US District Judge Charles Breyer for a second time...

[@Spring19TSLACFO @spring19tslacfo]

#fin2209 @ProfLowell Our website states that we intend on “retaining all future earnings to finance future growth and do not anticipate paying cash dividends in the foreseeable future.” The type of investor who prefers income through dividends should consider investing elsewhere.

[@Spring19TSLACFO @spring19tslacfo]

#fin2209

[@Spring19TSLACFO @spring19tslacfo]

#fina2209 @ProfLowell Why do we not pay dividends? It’s up to management to use funds to maximize business value. Our main priority right now is expansion, stabilizing production, and paying off debt. After capital expenditure, there’s not much left over for dividend payments.

[@Spring19TSLACFO @spring19tslacfo]

#fin2209

[@Spring19TSLACFO @spring19tslacfo]

While we finally are getting the hang of production methods, delivery methods have posed a new challenge. This can be exemplified by the push to deliver by the end of the quarter! @ProfLowell #fina2209 https://t.co/hgM6Iyf2mK

[@Spring19TSLACFO @spring19tslacfo]

#fin2209

[@Spring19TSLACFO @spring19tslacfo]

Tesla is asking employees to volunteer and help deliver 30,000 cars before the end of quarter 1! This happened soon after Model Y SUV was unveiled, which could create demand pressure for the model 3, as customers might opt to wait to purchase the SUV. @ProfLowell #fina2209

[@Spring19TSLACFO @spring19tslacfo]

#Fin2209

[@Spring19TSLACFO @spring19tslacfo]

Talk about capital structure! TSLA is the perfect example right now, as we just passed the maturation of a $920 mill debt. Our plan according to Musk is to pay off our debt rather than refinancing to reduce the debt load and overall leverage of the company. @ProfLowell #fina2209

[@Spring19TSLACFO @spring19tslacfo]

#fin2209

[@Spring19TSLACFO @spring19tslacfo]

Yikes! Did Elon Musk approve this information with the company? 😬 U.S. securities regulators didn’t seem to think so when they filed in federal court. In conjunction with a previous fraud settlement involving Twitter, Musk is not having a good year with PR. @ProfLowell #fina2209

[Elon Musk @elonmusk]

Tesla made 0 cars in 2011, but will make around 500k in 2019