Read on Twitter
1/ I have outlined possible reasons that $TSLA has not yet tapped the capital markets. Such reasons included 1) it is imminent, 2) don't need capital, 3) stock price too high (bro)...while all possibilities are still on table, I am going to elaborate on a less understood one.
2/ To limit their liability under the Securities Act, underwriters are required to perform a reasonable investigation (due diligence) to ensure there are no material misrepresentations or omissions in the offering documents, including those docs incorporated by reference.
3/ With respect to the financial statements that are included in the offering docs, underwriters can rely on a "comfort letter" from the accountants who sign off as experts on the financials and assume liability. For audited financials this is rather straightforward.
4/ For instance, in the last $TSLA equity offering, the audit was just completed as the year had ended. There were very few unaudited financials in the prospectus, or incorporated by reference. @PwC would therefore assume the diligence risk on all of the financial info.
5/ Interim financials found in the 10-Q are unaudited. This provides additional risk to an underwriter, as the auditors will not be as willing to provide comfort. An underwriter must conduct a “reasonable investigation” of the unaudited financial information to have defense.
6/ So IF (and I am not stating as a fact, only a possibility), as many here including @davidein have suggested, Tesla made very aggressive accounting entries in Q1 to improve margins, make a profit, etc., and such items ultimately need to be corrected/reversed in future quarters,
7/ this creates enormous risk for an underwriter in any future lawsuits. On a related side note, I am still not sure why the proxy hasn't been filed, although I don't think that would necessarily hold up an offering, unless it is being delayed to postpone a mat'l disclosure.
8/ So in summary, the theory is $TSLAQ wants/needs to do an offering, underwriters dug in deep on the 10-Q to protect themselves, found issues that prevented them from moving forward (unless corrected), and there is an impasse with the company. all jmho and speculation.
