More Bad News: Tesla Is About to Owe $920 Million in Debt
Will Tesla make it past this next speedbump?
Elon Musk-led electric vehicle manufacturer Tesla has had a chaotic month. End-of-the-year figures showed that it had scaled up production dramatically in 2018, but weeks later the company announced that it was laying off seven percent of its workforce.
Now, CNBC speculates that some of those financial jitters could stem from a nearly billion-dollar debt that’s about to come due to for the automaker — a tough start to 2019 that could impact not just Tesla’s long-term chances but the outlook of the entire EV industry.
The debt stems from a financial instrument called a “convertible senior note,” according to CNBC: basically, if the company’s stock is trading for more than $359.87 on March 1, the debt will convert into Tesla shares — but if not, it’ll owe the $920 million debt in cash.
Why’s that bad news for Tesla? Because the automaker’s stock hasn’t traded above that value in weeks, the network reports.
Tesla has clearly been making efforts to shore up its bottom line. In addition to he layoffs, it dropped its longstanding customer referral program this past week.
If it’s forced to cough up the debt, according to CNBC, Tesla will wipe out approximately a third of its cash reserves — a bleak state of affairs for a futuristic venture that’s struggled with certain business norms as it attempts to upend an established industry.
More on Tesla: Elon Musk: Tesla Is Dropping Its Customer Referral Program
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