Tesla pulls on the purse strings by raising a record loan

Decidedly elusive and delivering a speech according to the times, Elon Musk suddenly changes strategy after having sworn a fortnight earlier that he would not do it. After bewitching investors to the point that they place a value unrelated to its production figures, the whimsical boss of the Californian manufacturer, Elon Musk, did not hesitate to preach the opposite of what he swore a little earlier.

Despite its promise not to take advantage of the soaring market to go into debt again with the markets, Tesla announced Thursday that it would raise more than $ 2 billion in new money. These funds will be used to "further strengthen the balance sheet" and to finance the company's expenses and overheads, said the electric vehicle manufacturer in a document addressed to the stock market policeman, the SEC.

Homeopathic production

In detail, Tesla intends to sell a little more than 2.65 million of its shares, which would bring it a little more than 2 billion dollars at the closing price of the Tesla title (767.29 dollars) Wednesday evening on the Stock Exchange of New York. Musk himself has pledged to acquire 13,032 titles for a total of $ 10 million, while Larry Ellison, a member of Tesla's board of directors and co-founder of the IT group Oracle, will purchase $ 1 million.

Tesla pulls on the purse strings by raising a record - Tesla pulls on the purse strings by raising a record loan

The fiasco of the presentation of the Cybertrick with the starry armored panes under the hammer blows did not prevent the surge of pre-orders, on the contrary.

© FREDERIC J. BROWN / AFP

This reversal illustrates to what extent Elon Musk knows how to play with his image and ignite, beyond all reason, investors with the electricity fairy. It is true that the temptation is strong, when the brand painstakingly assembles 367,500 cars in 2019, to take advantage of a valuation unrelated to this volume. At more than 135 billion dollars on Wednesday, Tesla weighs more than General Motors, Ford and Fiat Chrysler combined (112 billion between them). Yet he is a dwarf in the land of giants who produce 12 to 20 times more cars than he does. But they are all declining due to the lack of sufficient electric or hybrid vehicles, while Tesla, starting from very low, is naturally in constant progression.

Read also "Tesla: Elon Musk, the man who was worth 100 billion dollars"

However, Tesla lives on market hopes and a blank check from investors who do not want to see that no profit year since its creation in 2003 has been completed. The marketing and communication of bateleur Elon Musk "do the job" as demonstrated by the presentation of his Cybertruck, an electric pickup truck with a stealthy armored design that only Tesla could dare to present. Balance sheet, according to Elon Musk, three years of production would already be pre-sold, it is true with a derisory reservation check.

Read also: “Tesla wins around 150,000 pre-orders for the Cybertruck”

False promise

1581641941 913 Tesla pulls on the purse strings by raising a record - Tesla pulls on the purse strings by raising a record loan

This idea of ​​a loan received a rather cool reception on Wall Street where the title Tesla yielded more than 2% in the first exchanges. But three times nothing reported the surge of action in recent weeks, as dizzying as a Space X rocket, another activity of Elon Musk. However, Thursday investors were puzzled because Elon Musk had justified that Tesla was not going to go into further debt on the markets to finance its operations. Two weeks later, this promise fizzled.

"It makes no sense to raise money when we expect to generate cash flow," the whimsical Elon Musk said in a conference on January 29. Tesla's debt was $ 11.6 billion as of December 31, 2019. This does not prevent the group from swarming with projects.

He is building his first European factory in Berlin and has promised that it will be operational in 2021. However, he recently started production in his Chinese factory in Shanghai which is exposed to the consequences of the coronavirus and to a local market down sharply, by 18% in January. He produced the Model 3 there and will launch his first SUV, the Model Y, in the United States.

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