New York: It is fortunate for Elon Musk that investors in Tesla take him seriously but not literally.

Wednesday evening’s fourth-quarter results from Tesla Inc. were even more hotly anticipated than usual. These were the first set to include recently-acquired SolarCity Corp. and come at the start of a year when Tesla is due to start producing the all-important Model 3.

Musk upstaged all that, though, by kicking off the analyst call with an announcement that Jason Wheeler, appointed CFO just over a year ago, would be leaving the company, only to be replaced by Deepak Ahuja—the man Wheeler had originally replaced himself.

A preacher might advise investors to consider all this as not so much losing a CFO as regaining a previous one. But on to the results.

In reality, SolarCity is a sideshow. All Wednesday’s numbers really did was provide more evidence that the acquisition by Musk’s other company—he’s CEO of Tesla and chaired SolarCity—bailed out the solar business. Tesla’s figures for the fourth quarter implied that SolarCity’s total installations for 2016 were about 800 MW, well below the 900 MW it guided to only three months ago and nowhere near original 2016 guidance of more than 1,200 MW.

The central issue, as ever, is Tesla’s cash flow—and the company served up some eye-catching numbers on this front, starting with this one: $970 million. That’s how much cash the company burned through in the last three months of 2016.

To borrow a phrase from another figure known for straddling the seriously-literally divide—and one Musk has been spending some time with recently—that’s yuge.

It looks set to get yuger, too. First off, these numbers confirmed that Tesla’s third-quarter brush with cash-flow positivity really was the exception that proved the rule.

As I wrote here and here, Tesla pulled all sorts of levers to get itself into the black that quarter, from selling an unusually large number of zero-emission credits to running down inventory, putting off paying suppliers, and restraining capital expenditure.

Wednesday evening’s report revealed that, lo and behold, revenue from selling credits fell by 86%, payments to suppliers jumped, and capex more than doubled.

The thing to bear in mind about that bigger capex number is that it was expected to be even bigger: Guidance given at the end of October implied it would be north of $1 billion.

With the Model 3 still to be launched, though, that spending is still coming. Tesla now expects to invest $2-$2.5 billion ahead of production launching, slated for July. In other words, capex in the first half of this year is projected to be more than the combined total for the past six quarters. The fourth quarter’s cash burn was just a taste of things to come.

As for the Model 3, Tesla issued some vague guidance for production this year, which is set to exceed 5,000 a week “at some point in the fourth quarter" before getting to 10,000 a week next year. A final version of the vehicle for public view remains elusive, five months before production is apparently due to begin.

The thing is, of course, it hardly matters.

When it comes to Tesla bulls, the seriousness of Musk’s vision is what counts, not hitting those targets literally. After all, the company has missed its original guidance for deliveries three years in a row. And even relatively bullish analysts don’t expect Model 3 deliveries in 2018 to get anywhere near the 500,000 figure Tesla has set out.

Yet Tesla’s stock trades close to its all-time high; it was actually up in after-hours trading, despite the cash bonfire and the CFO tag-team act. Its market capitalization is now close to that of its much bigger rival, Ford Motor Co.:

This heady cocktail of rampant cash burn and logic-defying valuation sets up the obvious next step: another equity issuance, and probably a big one.

Musk himself admitted as much on Wednesday’s call, saying that, even though it isn’t necessarily needed, it “probably makes sense." When it comes to raising more money versus trying to fund Tesla’s ambitious program internally, he mused:

How close to the edge do we want to go?

It’s a question investors should be asking themselves. Bloomberg

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