Tag archives for john shinal

Why Tesla will need more loans to make it through 2013





It’s fun to bet against Elon Musk and Tesla – that’s the best reason we can find for so many people doing it even though the man, his company and his cars are still here and still very popular. The latest name inscribed in the column labeled “Skeptical of Tesla” is John Shinal at Market Watch who, in year-end commentary on Tesla’s financials, says that the “carmaker’s financials are reminiscent of a dot-com’s.” He does not mean that in the good way.



To be fair, Shinal isn’t exactly betting against Tesla, he’s saying that if you check the bottom lines, the only thing keeping Tesla alive is the hundreds of millions in Federal Department of Energy loans it has received. Based on its filings, he says the company has less than six months of cash on hand, hasn’t produced as many cars as it promised and had to lower its revenue forecast for 2012, has had a “year of net losses and negative operating cash flow,” and was underwater by at least $37 million at the end of the third quarter.



But Shinal’s not done there, summarizing Tesla as an operation with “a poor habit of failing to deliver to customers the cars it has promised them, while simultaneously raising the prices of those yet-undelivered cars,” and “a lousy level of customer service.” He says there are more damning things to be found in Tesla’s SEC registration settlement from September, but we’ll have to wait for his next column to find out what those are. The takeaway, in Shinal’s opinion, is that even though Tesla will keep getting money from the government, that investors have no business dealing in Tesla stock.



Early in his piece, Shinal says Tesla’s financials are worse than those of Zynga and Groupon, two hot dot-coms that have fallen on their faces since their IPOs. Shinal knows far more about finances than we do, but we wonder if it makes the most sense to compare a brand new car company developing brand new technologies – with the colossal amounts of up-front cash each one of those things requires, and a company with Tesla’s record so far – to a social media game developer and an online coupon distributor. Head over to Market Watch to read the full piece.

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Analyst says Tesla is low on cash, dangerously so

tesla model s



Unless Tesla Motors can secure outside funding, the company will be in dire financial straits during 2013, says MarketWatch tech investor John Shinal. In fact, if Tesla hadn’t received hundreds of millions of dollars from the federal government in 2012, its financials would already be gasping for air, he said.



Tesla is a candidate for stock market collapse this year, unless it can secure additional cash, Shinal said. Despite its sketchy numbers, Tesla has managed to move its stock value up more than 30 percent since early November, he acknowledged. Tesla’s stock has moved within a tight range, between $33 and $35 a share.



Shinal said the Tesla’s financials were worse off than struggling post-IPO internet companies Zygna and Groupon. “As of September 30, Tesla had cash and short-term securities of $86 million, down from $280 million at the start of the year,” he stated. “That leaves Tesla with less than six months’ worth of cash, given that it burned through almost $200 million during the first nine months of 2012.” Tesla had “no comment” about all this when contacted by AutoblogGreen.



Tesla Motors very much needs strong sales of its Model S, and to do that it will need to continue to ramp up production so sales meet the company’s funding needs. Tesla might also need to find more outside investors, similar to the relationships established with Daimler and Toyota. Tesla could tap into its reputation for providing advanced electric vehicle powertrain technology, and could seek investments from other established automakers.



Despite Shinal playing Chicken Little, Tesla’s financial conditions were starting to look a bit brighter in late 2012. It is paying back its federal loan earlier than anticipated and has indeed started ramping up production volume to take advantage strong demand. We agree with Shinal that 2013 will be a benchmark year for Tesla, whichever way things go.

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By Jon LeSage