Tesla Financial Essay

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Tesla Financial Progress Report
Erin, Kyle, Matt, Mitch
4/2/15

As we have stated before Tesla is a new company that has had a short financial history. None the less Tesla has been making major financial moves trying to increase its production and market share. When reviewing Teslas Balance sheet the overall trend is that everything expanding, assets, cash, liabilities, debt, which is typical in a new business trying to increase their market share.
Tesla went public in 2010 and opened at $19 a share. The stock stayed relatively level until the release of Model S and the news that the sales surpassed both BMW and Mercedes electric hybrids. Tesla’s stock got a large push when the news that Apple may become a potential partner, and then a month after they turned their first profit.
Tesla’s first major dip took place in November when there was a worry that Tesla’s Model S would have to be recalled due to a faulty battery. Tesla quickly corrected the problem to eliminate any further damage to the market. Tesla continued to increase the volume of cars produced each quarter, yet there was no profit. None the less, the stock continued to increase.
This is an extremely volatile stock, in which a tweet alone can cause a 10 point jump in a matter of minutes. This stock is considered a “cult” stock, and has been analyzed as overvalued, from not only analysts but Tesla’s own CEO Elon Musk. He has voiced his concern on the value placed on the stock. To put things in consideration the market capitalization of Tesla’s stock prices at
$26 billion and made 34,000 vehicles last year and did not make a profit. Fiat Chrysler is worth $20 billion and make 1.8 million cars last year. The perceived value of this stock relies solely on the expected return that Tesla has promised for the future.

BALANCE
SHEET

2014

%

2013

%

2012

%

2011

%

ASSETS
CASH

1,910.00
A/R 226.60
INVENTORY 953.68
OTHER 0.00
TOTAL
CURRENT 3,090.28

33.27%
3.95%
16.61%
0.00%

845.89
49.11
340.36
0.00

35.46% 201.89
2.06% 26.84
14.27% 268.50
0.00% 0.00 53.84% 1,235.36 51.79% 497.23

18.58%
2.47%
24.71%
0.00%

255.27
9.54
50.08
0.00

38.94%
1.46%
7.64%
0.00%

45.76% 314.89

48.04%

One unique component of Tesla's financials is its substantial amount of cash on hand. Currently, Tesla holds $1.92 billion in cash. Tesla contains such a large sum of money in order to follow through on its investment of the Gigafactory. The Gigafactory is projected to cost $5 billion, and Tesla has committed to putting forth $2 billion worth. In 2013, Tesla only held $840 million in cash which is not nearly enough for their commitment of $2 billion. In order to overcome this deficit in money, Tesla has began to use convertible notes, "In an offering that was bigger than initially estimated, the company sold $800 million of 0.25 percent, five­year notes and $1.2 billion of 1.25 percent, seven­year securities, according to data compiled by Bloomberg."1 Due to the sums of money accumulated from these convertible notes, Tesla has acquired $1.92 billion of cash on hand for its financing of the Gigafactory.
Another reason for their large increases in cash can be contributed to their increase in stock. From the years of 2012­2013, Tesla issued nearly $400 million in new common stock to once again help with their financing of the Gigafactory.
In the balance sheet for Tesla, we notice that their inventory from 2011 to 2012 takes a significant jump to over five times the amount in 2011. We believe that most of this is due to the release of the Model S in 2012. They were producing cars to obviously meet the demand of consumers when the car was officially released. We also know that as most car manufacturers, they take orders for cars before they are released, even more so with Tesla. Tesla uses a lot of the pre­order payments to help invest more into the production
and
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