Offbeat Goldman Sachs: Tesla is going to need to raise $10 billion in 2 years to keep going

17:21  17 may  2018
17:21  17 may  2018 Source:

Elon Musk announces a major shakeup at Tesla

  Elon Musk announces a major shakeup at Tesla Tesla will begin the restructuring process CEO Elon Musk discussed on a conference call in early May.Tesla CEO Elon Musk on Monday told employees the company plans to "flatten" its structure as it works to improve communication and trim activities "that are not vital" to its success.

In this case, Goldman Sachs analyst David Tamberrino hung a "sell" recommendation on Tesla shares in late February, saying it'd miss its Model 3 deadlines and will likely need to raise additional cash by the end of the year .

Goldman Sachs just published another Tesla note. If Goldman is talking, I’m listening. Goldman sees another capital raise coming this year ? It didn’t say so, but that’s what its numbers suggest. Let’s call it .25 billion , plus or minus. How many Model 3 deliveries in 2017?

a car parked on the side of a road© Provided by CNBC Electric car company Tesla may require as much as $10 billion in additional capital by 2020 to fund the company's operations, according to Goldman Sachs.

"We believe this level of capital transactions may be funded through multiple avenues, including new bond issuance, convertible notes, and equity," analyst David Tamberrino wrote in a note to clients Thursday. "We see several options available to the company to refinance maturing debt and raise incremental funds, which should allow Tesla to fund its growth targets."

While Tamberrino was confident chief executive Elon Musk won't have trouble acquiring the extra cash, the infusion will likely present its own costs. Issuing additional debt could weigh on the company's credit profile, while supplying more stock or convertible bonds would dilute current shareholders.

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For example, after Tesla raised billion from investors in May, his worries eased about the company’s cash needs . Moreover, Musk obtained his two loans from Goldman Sachs by pledging his own Tesla shares as collateral.

Goldman Sachs is reportedly helping the company raise 13.1 billion yuan ($ 2 billion ) for a 10 percent stake, which would value the company at billion . They plan to use the money to finance their second battery factory next to their headquarters in Ningde, Fujian Province. Tesla has been calling

Tesladid not immediately respond to CNBC's request for comment.

Despite the forecast for additional capital requirements and a sell rating from Goldman, Musk insisted he has no intention of raising new money as recently as May 2.

Asked earlier this month if he's mulling a capital raise, Musk simply said "no."

"I specifically don't want to," he said on a conference call after Tesla posted first-quarter earnings that beat expectations.

Tesla finished the quarter with roughly $2.7 billion in the bank, down from a balance of $3.4 billion at the end of 2017. The persistent cash burn has kept analysts like Tamberrino unconvinced that the Palo Alto, California-based company can keep going at this pace without a larger financial cushion while short sellers keep the heat on the company' equity.

Tesla shares are down 8 percent this year and closed Wednesday at $286.48, giving the automaker a market value of $48.6 billion.

Tamberrino believes the stock price will fall to $195 over the next six months, a 31 percent decline.

Goldman Sachs made a staggering $200 million in one day as markets plunged .
Boom times have returned on Wall Street, at least for one trading desk. Goldman Sachs made $200 million in profit on a single day this February as calm in stock markets was shattered with a historic surge in volatility, according to people with knowledge of the move. That's on par with what the firm's derivatives unit typically makes in an entire year, said the people.


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