The Amazon analogy I made last month really makes sense when talking about Tesla because we are nearing the end of this cycle. Now is the time to worry about cash flow because the potential for a sudden funding halt is increasing.
Amazon's cash burn as the tech bubble popped
Take a look at how this issue was framed as the bubble popped. Justin Fox gave a retrospective at HBR in 2013:
In March 2000, Barron’s reported that 51 Internet companies were burning cash so fast that they’d be broke by the end of the end of the year. The article (it’s behind a seemingly unbreachable paywall) has acquired the reputation of having marked the end of the dot-com boom. The Nasdaq composite index peaked on March 10 at 5132, and by the end of the month was in a full-on collapse (as I write this, it’s only a...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.