Reports: Tesla's Low Stock Price Forces Unwanted Cash Payment of Nearly $1 Billion
According to financial publications following Tesla's cash position, the company was just forced to make a huge cash payment to its debtors of $920 million. This is a payment Tesla would have preferred not to make, but its stock price was lower than the company had bet on.
The payment was a convertible bond obligation. Tesla has been using outside funding to drive its company forward at a very high cash burn rate for many years. Part of the way Tesla obtains the cash it needs is via bonds. This particular bond had a clause that if Tesla's stock was trading at $359.87 per share, Tesla could opt not to pay the bond off using its own cash, but instead, the bondholders could be forced to accept Tesla stock. Which they could either then sell or keep. However, since the stock price was lower than that point, the bond has been paid in cash according to multiple reports.
CNBC reports that Tesla made the payment. This means that about one-quarter of Tesla's cash was used up to make this payoff. In its latest SEC filing, Tesla said that it had $3.69 billion in unrestricted cash and equivalents at the end of 2018.
Cash is a real issue for Tesla. In a video interview in November, Elon Musk admitted that the company had been "weeks from death" earlier in 2018 due to a lack of available cash. That was during the span of time that the Model 3 production delays had put Tesla about six months behind schedule for its sales, and thus, its revenue.
Teslas's stock price gets much attention from those in the media that follow such topics closely. The stock was trading under $300 per share at the time this story was written, down from a high of $383 in June of 2017.