Tesla Stock Upgraded on Massive $20 Billion Cash Balance

By Douglas A. McIntyre Updated Dec 21, 9:59AM EST · Published Dec 19, 7:12AM EST

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Tesla Stock Upgraded on Massive $20 Billion Cash Balance — © jetcityimage / iStock Editorial via Getty Images

Tesla Inc. (NASDAQ: TSLA | TSLA Price Prediction) jumped to almost $700 a share as it was added to the S&P 500. Its market cap jumped to $660 billion. That puts it well ahead of both Walmart and Berkshire Hathaway. The price has surged despite the fact that it will only sell about 500,000 cars this year. A fraction of global leader Volkswagen, which will sell close to 10 million.

Tesla’s shares were also upgraded by Standard & Poor’s, partially due to cash on the balance sheet that the rating agency believes will be nearly $20 billion by year-end. Tesla approached bankruptcy in 2017. According to CNBC, founder Elon Musk admitted: “Closest we got was about a month. The Model 3 ramp was extreme stress & pain for a long time — from mid-2017 to mid-2019. Production & logistics hell.”

Standard & Poor’s issued its new opinion on Tesla’s credit rating in a note with the title “Tesla Inc. Ratings Raised To ‘BB’ On Mounting Liquidity; Outlook Positive.” Among other things, it said:

S&P Global Ratings today took the rating actions listed above. Equity share sales throughout 2020 have increasingly boosted liquidity and substantially curtailed the company’s financial risk. On Dec. 9, Tesla completed the sale of $5 billion of common stock through its at-the-market offering program. The company raised about $7.3 billion cash in two previous share sales this year. We expect cash on the balance sheet to exceed $19 billion at the end of 2020.

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The cash balance will not settle the debate about Tesla’s future. It continues to be challenged by the early but growing electric vehicle programs of much larger rivals, particularly VW. The world’s largest car manufacturers plan to pour billions of dollars into EV design, production, and marketing.

Some forecasts put global EV sales at 20 million by 2030. More and more states and even countries will mandate that EVs become part of efforts to cut global air pollution. However, the $20 billion may not protect Tesla from an onslaught of competition.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.