Tesla Appeals to Junk Bonds in Exchange for $1.5 Billion
Tesla managed to make headlines a couple of weeks ago when it announced that it is ready to start producing the highly anticipated new Model 3 Sedan. The new all-electric car is a really sought-after automobile and as a result of that, Tesla received over 500,000 pre-orders during the first week. This is quite impressive and it leads people to believe that Model 3 will be a hit.
Even though everything seems to be going perfectly fine for Tesla, Elon Musk still wants to issue junk bonds in order to get the production for this new model ramped up. In case someone might not know what junk bonds are, we will go over them right now. A Junk bond is basically a high-yielding high-risk security move that’s made by companies who are looking to get a hold of cash in a short period of time.
Elon Musk announced that Tesla needs a whopping $1.5 billion in order to get the production for the new sedan started. While this sum might seem like something that’s unachievable, Elon Musk is confident in Tesla. Especially since Tesla’s company shares are up by 67 percent this year and the new Model 3 is definitely going to be a hit. Worth mentioning is that Tesla’s shares make the company worth somewhere around $60 billion and that it is ranked higher than even General Motors and Ford Motor.
According to Robbie Goffin who is a bond expert and the managing director of FTI Consulting, Tesla is more than surely going to get the $1.5 billion it’s looking for. Furthermore, Robbie Goffin stated the following “Bond investors, who typically don’t love companies that don’t make money, will be far more forgiving when it comes to Tesla”. Nonetheless, we can be sure that once Model 3 starts shipping, Tesla is going to be worth even more than $60 billion.