Tesla bull blames chaotic strategy on lack of capital

Tesla bull blames chaotic strategy on lack of capital

One of the few Tesla bulls I really enjoy listening to is Galileo at Hyperchange TV.

He has done a huge amount of research into the company and while I may have disagreed with his view on likely outcomes, I’ve always respected the amount of research he has undertaken.

In this brutally honest video, Galileo explores questions about recent demand at Tesla, its abrubt changes in strategy, and the possible shortage of capital that may be driving recent events.

My own view is that bulls and bears need to explore the difficult question of why Tesla hasn’t raised fresh capital. Is it pure stubbornness on the part of Musk? Or is it possible that raising equity would be too difficult due to litigation proceedings? Or perhaps Musk does not want to risk facing a personal margin call if equity issuance resets the share price at a materially lower level?

The Tesla 5.3% 2025 bond (issued in 2017) is currently trading at 86.5 cents on the dollar for a yield of c. 8.2%. Moody’s rates Tesla a B3 credit, with a negative outlook. Raising significant amounts of debt capital in this sort of environment might not be straightforward, either.

At the time of publication, Graham Neary has a short position in TSLA and a long position in TSLA puts.

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