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Tesla has huge liabilities in terms of debt and (probably under-accouted-for) warranties. Even if the stock dropped to $1, wouldn’t this be the biggest Apple acquisition in company history? Tesla has 12+B in debt and other liabilities and is losing nearly a billion a quarter. That’s four Beats and another one per year.

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What else are they going to do with their cash horde except make big acquisitions? Strategically, I think this could make sense in the long term, even if it loses for a very long time, just for the battery research team and the foothold into the electric car business.

Stock buybacks

Why does having more cash make a business strategy better? Just because they have cash to spend, doesn’t instantly mean there are synergies.

In fact, most corporations tend to spend cash for acquiring irresponsibily. At the beginning of any MBA class discussing mergers and acquisitions, they’ll cite the fact that the majority of these fail to produce the intended value.

Apple could pay off all of Tesla's debt with like 5% of its cash reserves. Tesla is highly ratioed, but that's a function of its own financials -- to a company like Apple, the debt isn't very scary.

It's not an issue of scary, it's an issue of ROI. What's the ROI on a $12B Tesla buy for Apple?

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