Bloomberg: Tesla's nightmare before ChristmasTesla "has burned through roughly four out of every five of the $3.2 billion dollars it has raised since late March through selling new equity and convertible debt and its debut in the high-yield bond market."
"As Tesla's spending has accelerated this year, its balance sheet has taken all of the strain. Consequently, debt has soared. Even just using debt with recourse to the company, on a net basis it has almost tripled since the start of the year to $3.36 billion.This would matter less if the primary objective of sucking in most of that external funding -- mass production of the Model 3 -- was fast approaching. Instead, it has receded further."
The company is rapidly running out of room between its cash burn rate and its reducing ability to raise cash, especially with its current cash pretty much equaling its current liabilities, with the latter increasing recently. The price of its bonds are falling (greater perceived risk of default), and unless its share price recovers quickly it may be much more difficult in the future for the company to raise cash. With no positive cash flow in sight, the company is completely dependent upon its ability to sell more equity and/or raise more debt. Both avenues are starting to close.
"But the long term is really just an accumulation of short terms. And with Tesla now burning a billion dollars-plus per quarter, keeping the door open to capital markets and lenders is critical. Confidence about scaling up production of the Model 3 is the key to that door -- and it is slipping badly."
A virtuous circle can turn into a negative spiral very quickly in the capital markets for firms dependent on repeated injections of new money. Any further slip ups, and loss in confidence, and things could get nasty very quickly.
https://www.bloomberg.com/gadfly/articles/2017-11-01/tesla-earnings-the-nightmare-before-christmas