Markets

Elon Musk & Amber Heard Released A Joint Statement On Their Breakup

Elon Musk & Amber Heard Released A Joint Statement On Their Breakup

It's betting itself on the Model 3 moonshot, but de-risking the bet by taking out an insurance policy in the form of a $1.5 billion debt offering.

Tesla's bond will price later this week after several days of meetings with credit investors, who will weigh factors including the absence of a borrowing history, its lack of profit and its high cash-burn rate against its growth potential and its attractiveness as an environmentally friendly "green" issuer. In part, Tesla will apply the net proceeds from these senior notes to "strengthen its balance sheet during this period of rapid scaling with the launch of Model 3". Being an SUV means four-wheel drive is likely, although those after a truly capable electric vehicle may be better off waiting for the forthcoming Tesla pickup, which is also understood to be in development.

Heard recently confirmed their break up, but admitted she and Musk, 46, "care deeply for one another" and they "remain close".

The company expects the Model 3 to quickly reach positive gross margins as they reach volume production in late 2017 or early 2018, but they stay vague when it comes to guidance about being profitable. "They may be investing due to the uniqueness of the offering rather than the value". Then the dominos would begin to fall.

But short sellers weren't the only ones with a dour opinion of Tesla.




With every conference call, investors naturally want news about upcoming products - and we do too, Tesla didn't disappoint - discussing the upcoming Model Y, a compact SUV. In just under a year's time since he shared the novel idea on his Twitter feed, Musk's company has already landed a contract and is now boring tunnels at full speed.

That's where the actress and the innovator are apparently most comfortable sharing. You can call it a view of the future or blind optimism, but we call it a shared mission. It's a tech company with industrial assets growing 50% to 100% per year.

That made it all the more surprising that Tesla would be able to raise more money than expected and at such a reasonable yield for a company with a risky balance sheet. The real hurdle for Tesla will be to produce the vehicle on a scale that the automaker has never come close to achieving before.

Don't confuse the term "junk bond" with the quality of the company and magnitude of the opportunity in front of Tesla. The Model 3, Tesla's first mass-market vehicle, has received rave reviews from people who have gotten behind the wheel.

Just as most manufacturers do with small SUVs, Tesla will be basing its Model Y crossover off a compact sedan, in this case its semi-released Model 3.Previous to Tesla's second quarter earnings.


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