Profit Gun at Musk's Head: $9 Billion in TSLA Bonds Due Through 2025

The share price on Tesla rose a bit today, as did 2025 Bonds, but bond and profit worries remain.

Tesla share prices bounced a bit today but red lights are still flashing about Tesla's ability to pay back a monstrous pile of debt.

So Forget the Stock, Watch the Bonds.

> $1.8 billion of Tesla bonds due in August 2025 plunged to a record low on Friday. The bonds traded for just 84 cents on the dollar, down from 98 cents a year ago. The yield, which moves opposite price, almost doubled over that span to 8.6%.

> "Tesla is in a cash pinch," Cowen & Co. analyst Jeffrey Osborne said in an interview. "The primary concern above and beyond doing drugs and whatnot on podcasts continues to be the ability of the company to generate cash."

> More than $9 billion of Tesla's debt is scheduled to mature before 2025, including a total of $2.7 billion this year and next, according to a Goldman Sachs research report that called the company's balance sheet "concerning."

> "We could raise money, but I think we don't need to, and I think it's better to just not," Musk said.

> It may no longer be up to Musk. Analysts say Tesla may struggle to raise cash until the dark cloud of an SEC investigation is lifted.

TSLA 2025 Bonds Last Month

Charts from Finra Markets.

Tesla bonds rallied a bit today as did share price, but if Musk has to raise money again after repeatedly promising he would not have to, the bonds and the stock will both be crushed.

Tesla will burn through its remaining cash quickly if it doesn't soon turn a profit, and outside of playing financial games, I highly doubt it will.

Disclosure: I am short Tesla via a set of staggered PUTs.

Mike "Mish" Shedlock

Comments (7)
No. 1-3

Mish, the stock market is forward looking and all you speak of here has been long known. Tesla's debt in combination with an unprecedented media FUD campaign has corrected the stock price some 28% from the day after its Q2 report. Not sure why you were so greedy as to not take advanatage of a 2 week put position with such a profit. Could it be a token position to promote your shortie articles? To clarify can you tell us what percent of your portfolio is short TSLA? That is essential missing bit needed to confirm a real commitment versus pushing propaganda. To that end I am long TSLA about 8% of my portfolio, and last added shares at $261 on 9/7/2018


How does a yield double with the price going from 98 to 86? Does the coupon rate adjust based on price?


If I was Musk I would be drinking whisky and smoking joints too...

Musk has dug himself a hole. Before Musk's "considering taking Tesla private, funding secured" attempt to burn shorts Tesla was comfortably over 360 dollars and at that level bonds would have been swapped for stock in the earlier maturing bonds giving Tesla room to breathe until profitable.

Now Tesla needs to become seriously profitable in a much shorter time frame or Tesla is f*cked...