How long does it have? Put it this way: the days are counting down.
We’ve known for a while that Tesla is not exactly the healthiest automaker, financially speaking. Despite hitting Model 3 production milestones and making noteworthy technological advances for electric vehicles, Tesla owes people money. Specifically, the debt market.
According to Bloomberg, Tesla and its CEO Elon Musk have exactly 143 days until those debt bills are due. Interestingly, Tesla stock is still trading at high valuations and its bonds remain unaffected by the possibility of a default in the very near future. Obviously, this could change. A lot can happen in five months’ time.
Musk has another big task to complete during this time frame: making required changes to its board, such as removing himself as chairman, as imposed by the Securities and Exchange Commission following Musk’s now infamous tweet. Tesla also needs to further ramp up production to generate more cash because those bills need to be paid. Tesla could also somehow convince its creditors to help buy it more time, but that’s not a guarantee.
“The market isn’t indicating there’s any imminent danger, they have time,” said Chris Hartman, a senior portfolio manager at Aegon Asset Management. “It’s only five months, but as long as there isn’t some global liquidity crisis, they should be able to access the capital markets, albeit at a much higher rate, to keep the story alive.”
So, how much will Tesla owe in 143 days’ time? Over $1.5 billion, which is just a portion of its total debt of $11.5 billion that needs to be paid back in full in 13 months' time. It may sound a bit grim, but Tesla has proven, time and again, that it has the ability to persevere.
Musk, in particular, deserves full credit for that, but he also has some trouble of his own. Because of that tweet, he has to pay the SEC a $20 million fine. Tesla as a company also needs to fork over $20 million. The combined $40 million fine rightly has some investors worried.
We’ll find out in 143 days whether Musk and crew will survive (this time).