GADFLY: Tesla’s terrible, horrible, no good, very bad day
Tesla’s stock fell almost 7% on Thursday, writes Liam Denning, and the production schedule for its crucial Model 3 has looked unrealistic for a while
New York — Thursday wasn’t a good day for Tesla. The stock fell almost 7% and closed below $300 for the first time since May. These days, though, there’s another price marker for Tesla out there: the yield on its $1.8bn high-yield bond, launched in August. This has spiked in the past week to 6.12 %. Having priced initially at a marked premium to the wider single-B index, Tesla’s bond now yields ever so slightly more. This makes sense. Tesla’s production schedule for its crucial Model 3 vehicle has looked unrealistic for a while, and its earnings call on Wednesday evening did nothing to restore confidence in it. Until Tesla gets to mass production of the Model 3, it is likely to keep using cash at both the operations and investment levels. About 80% of the money it’s raised in public markets since March — including the bond issue — has been burned through already. Little wonder, therefore, that the bonds have dropped along with the stock. The bonds, like the stock, still look overpri...
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