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Comment by dkhenry | Hacker News Reader

You have been reading too many finance blogs. Their finances are far from a mess, they are just not what finance people like to see. They have cash on hand and a roadmap to execute on. If they don't execute they will go out of business, and they will take my money as an investor with them. I'm OK with that and as long as they continue to have a path to profitability I am all on board. I want to see them burning money to get market share, especially as they do something new. The idea that companies must always operate within a specific set of financial metrics is why GE is going out of business

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If Amazon listened to those same finance blogs that are chastising Tesla, they wouldn't be where they are today. Wall Street hates companies that invest every cent they make into future growth; they want solid companies like GE and IBM that pay out regular profits to investors, and end up old dinosaurs because they didn't invest in innovation.

The market analysts and financial blogs may hate companies like AMZN and TSLA, but Bezos and Musk will be laughing all the way to the bank because they didn't focus on short-term profits at the cost of long-term innovation.

Remember, every company on this planet has to constantly reinvent itself, or it will be disrupted by someone else. Musk is doing that. Don't listen to the financial blogs and analysts.

Amazon could have had a wildly profitable quarter by slightly slowing their expansion. Doing so would not kill the company.

It's not clear if Tesla can do the same.

There was a time in the past where Amazon could not have done that at all.

Sure, but how many companies have been in the same position and failed?

If they retooled to maximize profitability now they would not be worth the multiple they are.

> Their finances are far from a mess, they are just not what finance people like to see. They have cash on hand and a roadmap to execute on.

In other words, their finances are a mess. Negative free cash flow of $1.4b in the most recent quarter with $3.5b in the bank is cutting it very close. They're going to have to raise a ton more capital or issue debt just to execute on the Model 3, let alone all the other stuff they keep talking about (anyone remember the Solar Roof?). Their recently issued junk bonds are already trading off par, another issue is going to be expensive.

Spending money while building out your main product pipeline is perfectly acceptable to me. How many quarters of runway would you want them to hold on hand? If in six months when their cash on hand gets low they can issue a new round of funding and investors can decide if its worth pumping more money into the company or if they won't be able to turn a profit. This would be the exact behavior you get from any company in a high growth phase, the only difference is most of the time the only people who get a look at the books of these companies are the investment firms who lead crazy valuation rounds since the public doesn't have access to pre IPO startups.

That's kind of the point though - it's much more acceptable (to the markets) for a private company to be doing crazy things, low runway, etc, because if the company goes broke, the damage is limited to 'skilled' investors (those with enough means and know-how to get in on the investment). If a public company goes bust (which is the risk here) the damage is much more widespread, and will undoubtedly hit retail investors as well as professionals.

I bought a bunch of put options on the cheap, so I'm betting on reckoning next year, but not a bankruptcy.

Based on their valuation being too high for where they are, I'm guessing they'll do a share offering to get cash. This could cause they're shares to tumble and I'll make 400-1200% or not. I'm ok with writing off such a small bet, but wow what a fun ride it'll be to see how this all turns out.

Exactly. As a small investor in them I fully support them. Even if I lose all my money I know it went to cool research that has benefit the progress of science in a cool way.

you are a good person.

I mean, that's fine and dandy, but then you're really just donating your money to "science" and not investing it. Which goes back to the original claim that their finances are a mess.

I have done the same with two fusion energy companies, almost zero chance of payback but always the slim chance for a breakthrough to save the world. Think of it as a lottery ticket for rich and middle income people. Tesla is a lottery ticket that will probably pay dividends many years down the line, and if not they have at least kickstarted a better future.

> struggling to produce their most important car ever

Isn't this part of not executing the roadmap as planned? Put another way, how do you know if they are on the right trajectory to profitability? How much are they ahead/behind?

Tesla projected that it would produce 5K Model 3s per week by the end of 2017. In all of Q3 they produced 260! That kind of shortfall is clearly not part of any plan, unless it's one drawn up by GM and Ford. Source: http://autoweek.com/article/green-cars/tesla-model-3-product...

GM and Ford would be good at drawing up plans like that since its fairly common for production to be delayed on new car designs

http://www.leftlanenews.com/ford-may-be-facing-f-150-delays-...

https://jalopnik.com/chevy-bolt-ordering-delayed-by-three-mo...

And they will when you adjust for Elon time.

Kidding aside they've been in much worse situations before, it just wasn't nearly as public because it was well before their IPO.

They also moved this timetable up a year due to high demand, meaning more CapEx required. A few months won't scare people in the know, and thinking this would work without a hitch would have been naive anyway.

A three month delay on their first mass market car is hardly struggling. We get insight into where they are on that road map every three months. Come February they will have slipped even more, made up some of that delay or stayed three months behind. Right now they have more then enough money to get them to May of next year, if they miss again in Februrary and then can't raise more funds they need to change their plan.

> If they don't execute they will go out of business

Well this is exactly the concern. Tesla seems to be struggling to execute on their plan to build Model 3s.

when it comes to finance, it matters what finance people want to see

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