Tesla has some serious debt obligations.
Automakers like to make some outrageous statements on April Fool's Day. As a joke, Tesla CEO Elon Musk sent out a tweet saying his company had gone bankrupt. The statement was of course, a joke, but things haven't been so rosy for Tesla lately. The company burns through money at an alarming rate and production of the Model 3 sedan is still behind schedule. As Tesla continues to grow, it can be easy to loose sight of how big the problem has become. According to Bloomberg, the company is currently operating with over $10 billion in debt.
The massive debt is quickly becoming a worry for investors. “It’s pretty likely they’re going to have to go to the capital markets in the not-too-distant future,” said Bruce Clark, a credit analyst at Moody’s Investors Service. The company has $1.2 billion of debt to pay off in the next 12 months, and raising the money could be difficult. Tesla has seen its credit rating cut after failing to meet production goals on the Model 3. With spending currently estimated at around $6,500 every minute, Tesla is predicted to run out of funds before the end of the year without more financing. Musk is very good at raising capital, and Tesla does have several financial options here to raise the money.
We wouldn't categorize this as a death sentence, more of a serious wake up call. Tesla may not be bankrupt yet, but the debt is piling up and at some point we may have to question if the company can turn it all around.