For Tesla investors, the question isn't whether Elon Musk will meet his diminished target this week for Model 3 car production. They're wondering how he's going to finance the ones that come later.
Wall Street has pretty much disregarded Musk's joking April Fools' tweet over the weekend that the company "has gone completely and totally bankrupt." But Tesla's $10 billion debt load is turning into a real burden as cash dwindles and its bonds continue to slide after the electric car maker's credit rating was cut.
"It's pretty likely they're going to have to go to the capital markets in the not-too-distant future," said Bruce Clark, a credit analyst at Moody's Investors Service. Tesla has $1.2 billion of debt maturing in the next 12 months and is expected to burn through $2 billion of cash this year. After repeatedly missing Model 3 production milestones, raising money could prove difficult, he said. "Their credibility has taken some hits."
A representative for Tesla declined to comment.
Tesla is burning through more than $6,500 of cash every minute and would run out of funds before year end without more financing, according to data compiled by Bloomberg.
Musk has proven adept at raising money before, but it's likely to be more expensive this time. The unsecured bonds Tesla sold just months ago are trading near record lows, and a similar sale is less likely because investors probably would demand a yield of at least 10 percent. That's almost double the 5.3 percent Tesla had to offer last time.