Tesla Burns Through Record Cash to Bring the Model 3 to Market
&gt; “He’s going to need capital,” said Ross Gerber, chief executive officer of Gerber Kawasaki Wealth &amp; Investment Management, which holds Tesla shares. “That’s the one part of the financials that are a little bit troubling. To underestimate the cash burn over the next six months will be a mistake.”<p>It&#x27;s not that troubling. Even massive companies (AMZN in 2014) need to raise big capital. When you have something you want to do, you get the money and spend it.[1]<p>This seems to be constantly framed as negative (&quot;they aren&#x27;t making any money!&quot;), but that&#x27;s the correct growth strategy for what Musk wants to do. Nobody adds tons of debt just to <i>not use it.</i> Cribbing from my comment yesterday:<p>I&#x27;ve owned TSLA a long time and I hope they don&#x27;t start making money, and continue the Amazon model and actually build something with years of minimal or no profits, re-investing vigorously. Amazon had almost 20 years in business without &quot;making any money&quot; except a few quarters where they accidentally eked out some non-trivial profit.<p>But without their spending, they wouldn&#x27;t have become Amazon. Without Tesla&#x27;s spending, they won&#x27;t be a <i>future</i> company, they&#x27;ll just be a tiny car company.<p>For some historical comparison: Amazon added $6bn in debt as recently as 2014. Even very large and very successful companies take on debt to fuel growth far beyond &quot;bootstrap&quot; numbers. Both companies leverage as much investment money as they can to build and expand as fast as they can. If you look at Amazon&#x27;s raises in the late 1990&#x27;s you&#x27;ll find something more comparable to Tesla today relative to revenue. In 1999 Amazon raised $1.25 billion, and their revenue for the year was $1.64 billion. So they raised proportionally way more money than Tesla has so far this year. And spent it all!<p>full comment here: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=14915317" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=14915317</a><p>[1] The flipside of this is that it&#x27;s an indictment of companies that hoard huge amounts of cash, like Apple. That they can&#x27;t find a way spend it building future stuff is a signal that they are out of big ideas, and (in the case of Apple) have been for some time.<p>Musk and Bezos, on the other hand, have clear ideas of what to spend money on to build something.