Elon Musk Buys Some More Tesla as the Company Counts its Pennies (TSLA)

Mr. Musk may be anticipating a bit of a liquidity event now that his 32% owned SolarCity has filed to do an IPO. Tesla is trading at $29.36, up 47 cents on the day.
First up, Insider Monkey:
Elon Musk Recharges His Tesla Shares

Billionaire Elon Musk’s trust purchased about 35,400 shares of Tesla Motors Inc (NASDAQ:TSLA) on October 3^rd at an average price of $28.25. Tesla, where Musk serves as CEO, is up 50% from its IPO price from the summer of 2010 as the company has shown some success in developing all-electric cars for the public. The news more recently has not been particularly good- late last month the firm cut its Q3 sales estimates for its Model S sedan by about 40% ...MORE

And from the NYT's DealBook:
Cash Flows Are Critical for Tesla

 

Paul Sakuma/Associated Press An assembly line in Freemont, Calif., 

for Tesla’s Model S, a high-performance electric sedan.

In his debate on Wednesday night with President Obama, Mitt Romney referred to the electric-car maker Tesla Motors as a loser. He put it in the same group as Solyndra, the solar panel company that collapsed last year owing the federal government $535 million.

As it ramps up sales of its sleek electric sedan, Tesla doesn’t appear to be much of a loser right now. But a closer look at company’s cash flows suggests it is hardly out of the woods.

For young companies like Tesla, calibrating cash flows is critical. Customer demand may be high for a company’s product, but mistimed spending can lead to a cash crunch. And Tesla has been spending heavily to set up production as well as acquire the parts that make up the new sedan, called the Model S. The specter of cash problems returned last week. The federal government eased terms of its $465 million loan to Tesla to ensure the company didn’t breach key financial hurdles. The company then raised $193 million in a secondary stock offering, easing cash concerns.

This week, Tesla’s chief executive Elon Musk said that he expected the company to become “cash flow positive” at the end of November.

If Tesla does start becoming cash flow positive next month, and doesn’t stop, it certainly would not be a loser. But there are reasons to be skeptical.

 First, it seems as if Tesla was running very low on cash in the third quarter. It said that, after the stock offering proceeds and drawing down the last $33 million of the federal loan, it had cash in hand of $293 million at the end of September. Another way of looking at the situation is that Tesla had $67 million of cash before it drew down the loan and did the offering. That’s not a lot for a company that has been consuming $120 million of cash a quarter this year. That figure combines the cash consumed by Tesla’s basic operations, as well as outlays for plant....MORE