Tesla Motors (TSLA - Get Report) CEO Elon Musk in a series of weekend tweets talked up a surprise product announcement and talked down the company's funding needs, providing a spark to the automaker's suddenly-sagging shares.
Musk took to Twitter Sunday saying he wanted to "correct expectations" that Tesla, along with merger partner SolarCity (SCTY) , "will need to raise equity or corp debt in Q4," saying it "won't be necessary for either." In a response to a question about a potential offering in the first quarter of 2017, Musk said "probably not then either."
Tesla declined further comment.
Would also like to correct expectations that Tesla/SolarCity will need to raise equity or corp debt in Q4. Won't be necessary for either.— Elon Musk (@elonmusk) October 9, 2016
The market cheered the news, sending Tesla shares up more than 2.7%, or $5, to $200 in premarket trading Monday. If that jump holds into the normal trading session it would go a long way toward reversing a decline in the shares last week after Goldman Sachs cut its price target for the company from $240 a share to $185.
But absent clarification it is hard to say whether Musk's tweet said anything that wasn't already known.
Given Tesla had about $3.25 billion in principal sources of liquidity as of June 30, few if any have thought that the company would be forced to go to markets before year's end. And the idea that the company might raise cash in 2016 was suggested by Tesla itself, with the company saying in a securities filing updated on Oct. 7 that it is "currently planning to raise additional funds by the end of this year, including through potential equity or debt offerings."
It is unclear whether Musk in his tweet was simply reiterating that Tesla would not run out of cash before year's end, or walking back expectations that Tesla would do an offering in the months to come.
Though Tesla is expected to report perhaps the best sales quarter in its history when it provides third-quarter details this month, it seems improbable that any amount of additional sales would provide enough added cash to fund the massive capital requirements the automaker has in the quarters to come as it preps its forthcoming Model 3 for production, builds out its retail and charger network, completes work on its Nevada battery factory and perhaps props up money-losing SolarCity should that deal close as planned.
Assuming Tesla will have to return to markets at some point, it would be unwise for its CEO to limit his options by unilaterally declaring there are no plans to raise funds in the coming months. That would support the argument that Musk was saying only that Tesla would not run out of cash in the months to come.
Musk also tweeted that Tesla would unveil a product "unexpected by most" on Oct. 17, ahead of a planned Tesla/SolarCity product unveiling scheduled for later in the month. The company and its CEO provided no further details about the product announcements, though speculation centered on Tesla announcing a long-rumored hardware update for its controversial Autopilot driver assist feature.
The tweets and product announcements provide plenty of fodder for investors and skeptics to chew on while awaiting the rollout of Tesla's more affordable Model 3. The company has collected more than 300,000 deposits for the vehicle and has pledged to begin production by late next year toward a goal of boosting annual deliveries from 50,000 in 2015 to more than 500,000 in the years to come.