I entered a few $TSLA puts this morning for a move lower.
Rumors of a secondary offering and product delays are coming at a key technical period for the stock.
I loved the stock earlier this year to break out. It has.
Now I am looking for a pull back.
$TSLA weekly $252.50 puts $.80
Will I be right again?
Tesla Motors has given itself more room to maneuver as it works toward profitability. But with its stock almost back to its high, don’t rule out the company raising more money while it can.
Tesla recently took out a revolving credit agreement with several major banks, with capacity to borrow up to $750 million as needed for general corporate purposes. Company assets have been pledged as collateral for the majority of the credit line. The announcement came three days after current finance chief Deepak Ahuja said he would retire, pending the naming of his successor.
Mr. Ahuja’s successor will likely need to make use of the new funding. Auto manufacturing is capital intensive, especially when developing a new type of car, so spending money is nothing new for Tesla. In its history as a public company, Tesla’s capital expenditures have outpaced its operating cash flow, adjusted for changes in working capital, by a cumulative $2.7 billion, according to FactSet.
Tesla’s spending has increased just as rapidly as its ambitions. Chief Executive Elon Muskexpects to deliver 55,000 vehicles this year and almost 10 times that number in 2020. Deliveries of the new Model X crossover vehicle are scheduled to begin “late in the third quarter,” according to the company’s most recent guidance. And Tesla is working on other projects besides cars, such as its home and utility-scale batteries.
To meet these longer-term goals, however, Tesla will need a lot of cash.