The company won't be fine because it'll be trading at $20 per share.
(Yes, $20 is hyperbole, now read the rest)
The real issue will be the 2019 bondholder covenants. Tesla won't have the cash to pay them, Tesla won't have the buying interest to absorb dilution, and Tesla will still need money.
Basically with a lower and lower share price Tesla has fewer and fewer ways to service its debt and do further fundraising. They can, it just won't be good for shareholders. This is called a death spiral.
For a healthy company, a low share price has nothing to do with anything. For example, Tesla without debt and positive revenues would be a healthy company at $20 per share, it would even be undervalued and hurray you are the only person that noticed! But thats not the case for Tesla. Tesla is not a healthy company. And its going to become toxic.
Tesla's debt servicing cost 600 million yearly (Bill Cunningham estimates). It is producing Model 3s at a pace of 4k weekly (according to Bloomberg). Each represents 15kUSD in gross profit (according to Munro). It takes ten weeks to service the yearly debt using current Model 3 sales.
If these numbers are right, once Tesla proved to be able to produce Model 3s, it became financially stable. It will easily be able to roll-over bonds.
Good point. It's a different number, but a relevant datapoint anyhow. The last filing shows a gross profit margin of 15%.
It's a different number because it includes cost of the sale infrastructure. Unfortunately, it's for the quarter ending in June, so the volume of model 3 is still not very relevant against the other models.
Tesla would almost assuredly not be a fraction as valuable with bondholders running it as they would with Musk at the helm. The company's fortunes are inextricably bound up with the founder. The only thing the bondholders are likely to do with the business if they find themselves owning it outright is liquidate. A fact that is quite likely being taken into account in the current market brinksmanship imbroglio.
(Yes, $20 is hyperbole, now read the rest)
The real issue will be the 2019 bondholder covenants. Tesla won't have the cash to pay them, Tesla won't have the buying interest to absorb dilution, and Tesla will still need money.
Basically with a lower and lower share price Tesla has fewer and fewer ways to service its debt and do further fundraising. They can, it just won't be good for shareholders. This is called a death spiral.
https://www.investopedia.com/terms/d/deathspiral.asp
For a healthy company, a low share price has nothing to do with anything. For example, Tesla without debt and positive revenues would be a healthy company at $20 per share, it would even be undervalued and hurray you are the only person that noticed! But thats not the case for Tesla. Tesla is not a healthy company. And its going to become toxic.