While procrastinating, I happened to catch the headline that Musk/Tesla borrowed $750 million (announced earlier this week). My first thought: that's a strange figure. For all intents and purposes, that's $1 billion. My hunch is that realistically, Musk would have liked $1 billion but that would been quite a headline for the pundits: "Tesla Borrows $1 Billion." So, for PR reasons, perhaps he went with $750 million rather than $1 billion.
It's also possible he went to the banks seeking $1 billion, but they balked, reluctantly settling for $750 million. Supporting that is the fact that Musk had to get the loans from multiple banks, not just one (Deutsche Bank, Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo and Credit Suisse) -- seven big name banks in all. And the loan needs to be paid back in less than five years.
One wonders if we might not be witnessing the Greek problem: "If you owe your banker a thousand pounds, you are at his mercy. If you owe your banker a million pounds, he is at your mercy."
Some time ago, I read somewhere that AAPL was one of the most "shorted" stocks. Today, according to Yahoo!Finance, the number of APPL shares shorted represent 1% of total shares outstanding. TSLA? 25% of outstanding shares are shorted.
Tesla's debt is $2.65 billion according to Yahoo!Finance. I doubt that includes the $750 million announced today. And Tesla is burning through cash. Operating cash flow is an astounding negative $250 million and levered cash flow is a phenomenal negative $1.1 billion. (Some numbers rounded.)The rest of the "key statistics" for Tesla look just as bleak.
Apple? Operating cash flow is an astounding $75 billion, and levered cash flow is $45 (numbers rounded).
So, the "$750 million" number is strange:
- it isn't quite $1 billion but "really" it is
- as fast as the company is burning through cash, another $750 million hardly seems enough especially in a capital intensive industry
- it took seven banks to agree to this loan
- 25% of outstanding shares are shorted (watch out for a "short squeeze")