Famous Wall Street short-seller Jim Chanos has never hidden his disdain for the way Tesla Motors Inc (NASDAQ: TSLA ) conducts its affairs. Chanos warned Tesla stock investors in July to read the writing on the wall regarding the mass exodus of executives this year, comparing it to the situation at Valeant Pharmaceuticals Intl Inc (NYSE: VRX ).

Eight high-profile executives have left either company this year, with Valeant coming under fire for its avaricious drug-pricing policies, leading to a brutal implosion of VRX shares — down 75% year to date.

Tesla, for its part, has fared better than VRX, losing a relatively tame 12% YTD. TSLA’s woes can be chalked up to investors worrying that the company will burn through too much cash as it tries to achieve its goal to churn out half a million autos by 2018.

Is Tesla the Anti-Amazon?

Chanos recently took another swipe at Tesla on CNBC, slamming the company’s proposed merger with SolarCity Corp (NASDAQ: SCTY ) as ”’the height of folly.” According to Chanos, the combined companies will burn through as much as $1 billion every quarter, and constantly seek recourse at the capital markets.

Finishing off his tirade in style, Chanos said: “This is the anti-Amazon.com, Inc. (NASDAQ: AMZN ). What made Amazon great … is that they didn’t need capital.”

That final part might seem like a harsh indictment of Tesla, but Chanos is right on the money. Since its 1997 initial public offering, Amazon has never once made a secondary share offering. In sharp contrast, Tesla has made numerous trips to the capital markets in its short six-year life as a public company, the most recent being a $1.46 billion stock sale in March.

Investors hate secondary offerings because they dilute existing shares and hurt earnings per share. Tesla’s outstanding share count has ballooned to 148.69 million, 43% higher than where it stood five years ago. This is partly the reason why Tesla struggles to turn a profit.

But secondary offerings are just part of the equation. Companies also issue debt to fund their operations. Issuing bonds gives a company access to immediate cash, but the debt has to be repaid with interest. The interest is tax-deductible, which reduces the cost of borrowing.

Tesla does a little (or sometimes a lot) of both — making secondary share offerings and issuing debt. When it comes to issuing debt, Amazon is hardly a saint either. Its latest offering being a huge $6 billion bond sale the company made in Dec. 2014. That’s bigger than Tesla’s long-term liabilities. The previous bond issue by the retailer was a substantial $3 billion offering it made at the end of 2012.

Tesla’s debt-to-equity ratio of 1 looks bad compared to Amazon’s reading of 0.5. Yet, it compares favorably to readings by mature incumbents General Motors Company (NYSE: GM ), Ford Motors Company (NYSE: F ) and Fiat Chrysler Automobiles NV (NYSE: FCAU ).

Company Debt-to-Equity Ratio Amazon 0.5 Tesla 1 General Motors 1.2 Ford Motors 3.1 Fiat Chrysler Automobiles 1.5

Although Amazon has never made a secondary share offering, the company still experiences considerable share dilution due to hefty executive stock compensation packages ($2.12 billion in 2015).

To avoid diluting its shares excessively, Amazon routinely buys back stock. The company authorized buybacks worth $5 billion in February, which doesn’t seem like such a bad idea considering how AMZN has been on a tear and is currently trading at a new lifetime high.

Amazon’s buybacks, however, are rarely big enough to completely offset the effects of stock-based compensation. This is clearly evident in the company’s outstanding share count expanding nearly 5% over the past five-year period.

Skipping on the Razor’s Edge

Tesla operates in a vastly different industry from Amazon. The EV-maker has to spend close to 20% of its revenue on capex and R&D every year compared to less than 10% by Amazon. Tesla said that it plans to spend $1.75 billion during the second half of the year on Model 3 manufacturing build-out and expansion of the Nevada Gigafactory. Further, analysts have warned that Tesla will have to build several Gigafactories in the future to fully meet demand for Model 3. That’s the price TSLA has to pay for trying to disrupt the $9 trillion auto industry.

Over the short-term, Tesla’s cash flow remains safe. The company recently said that it’s on the road to achieving a good third quarter, but is skipping on the razor’s edge and has to trim any unnecessary costs to get there.

Investors, however, need not worry about Tesla selling any more shares in the secondary market this year because it has already said that it will issue convertible notes instead. The fact that Tesla said it expects to report a profit later in the latter half of the year should further help ease investor jitters about a possible cash flow crunch.

The long-term outlook remains good for Tesla Motors Inc.

As of this writing, Brian Wu did not hold a position in any of the aforementioned securities.

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