Concerns over production goals have been front and center for Tesla Inc (NASDAQ:TSLA) CEO Elon Musk of late, but that’s not the only issue on his plate at the moment. There’s also the little matter of debts that are coming due, and we’re not just talking about for the carmaker that’s churning through cash at a healthy pace.
Bloomberg has the details on an additional debt concern for Tesla.
With all the car-making troubles that are hounding Tesla Inc. these days — from the Model 3 bottlenecks to the furious cash burn — it’s easy to overlook the company’s SolarCity headache.
But 16 months after Chief Executive Officer Elon Musk kicked up controversy by acquiring the solar-panel installer founded by two of his cousins, its obligations are a strain on Tesla’s finances. The $2 billion purchase came with a $2.9 billion debt load, and a chunk of that is soon coming due. That’s bad timing for a company churning through about $6,500 a minute and trying to stave off the need for another capital raise.
According to the company, the solar business generated positive cash flow last year. While that may be the case, the debt load has still been a sore spot for shareholders, who are already concerned about the automaker’s own credit and debt concerns.
“SolarCity debt may not be the immediate cause of Tesla’s problems, but it certainly isn’t helping right now,” explained Covenant Review LLC analyst Alexander Diaz-Matos.
Tesla Inc shares rose $2.44 (+0.82%) in premarket trading Monday. Year-to-date, TSLA has declined -3.87%, versus a -2.29% rise in the benchmark S&P 500 index during the same period.