Investors looking to “buy the dip” may be chomping at the bit to do so with one of the best performing stocks of the past decade; shares of electrical vehicle maker Tesla Inc. (NASDAQ:TSLA) have plunged more than 27% from their 52-week high seen last year. Despite this significant drop, Tesla stock actually rebounded from a larger dip.

In fact, it is up more than 15% from a trough experienced earlier this month after concerns that the company would need to raise more capital, coupled with a high-profile Tesla crash which led to fatality, resulted in a widespread investor selloff. An April Fool’s tweet was apparently not taken lightly enough by the market earlier this month.

Balance sheet concerns for Tesla investors have remained top of the list for some time now, as Tesla’s new product roll-outs and production ramp ups have taken more time and money than expected.

While investors appear to continue to be willing to accept the risk which comes along with holding Tesla bonds, the interest rate the EV maker is required to pay is substantial – Tesla’s first junk bond issuance came mid-2017 at a yield of 5.3%.

Here’s a look at the reasons why Tesla may be forced to raise additional debt or equity within the next quarter or so, despite a firm statement from the company that Tesla is currently:

“[L]aying the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow. As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines.”

Production Concerns Remain for Tesla Stock

As with any company looking to become the next Ford Motor Company (NYSE:F) – Tesla has actually had an enterprise valuation significantly higher than Ford’s for some time now: volume, gross margin, and cash flow are likely going to be the hotbed topics for most investors in the next few months.

In order for Tesla to prove it is worth every penny of its $48 billion market capitalization, investors will require that Elon Musk and his team of workers and robots will be able to do what they say they are going to do this quarter.

After all, if production levels and gross margins do not increase to a level at which the company can sustainably survive without another cash infusion, the short-sellers will be right and the company’s stock price is likely to continue its slide.

Of specific concern to some analysts is that despite a four-fold increase in Tesla’s Model 3 production levels, resources have been re-purposed away from Model X and Model S deliveries, lowering margins in the near-term in an attempt to meet pent up demand for Model 3 Vehicles.

While a 5,000 vehicle per week target for Q3 may manifest itself, the question of what the make up of vehicles being shipped will be is one which analysts will be paying close attention to as the company’s ramp up continues. Any sort of production delay, recall, or shock resulting in a slowdown in deliveries over the next 90 days could be catastrophic for the company.

While some of this risk may be priced into the current 27% discount investors can receive by buying Tesla stock today, other analysts seem to believe it is a question of when, not if, Tesla will raise money which should be keeping investors up at night.

Debt or Equity Raise Remains a Likelihood

One thing is certain with Tesla, this is a company which has found very, very creative ways of raising money in the past. From asking investors for deposits on new cars, to selling flamethrowers, and engaging in everything from equity issuances to asset-back bond raises and high-yield unsecured bonds maturing over time, the company has found a way to raise debt in a big way.

After all, the EV maker has continued to burn through billions of dollars of working capital in recent years (2018 cash burn has been estimated to be in the $3+ billion range), leading many to believe a capital raise in the $2-$3 billion range is the only likely means for Tesla to move forward.

This is especially likely given the fact that Tesla has $1.8 billion in debt which matures within the next 18 months which will need to either be refinanced or paid off by cash flow from operations.

Besides a promise from Tesla’s chief that all is well on the farm, investors looking at the numbers may have difficulty coming to the same conclusions as Mr. Musk with respect to actual production levels, margins, and cash flow generation.

Pushing the discussion about new debt aside, the mountain of debt which is set to come due in the near, medium, and long-term will require massive amounts of free cash flow which have yet to materialize.

My take is that Tesla is simply too risky at this point in time to consider a “buy the dip” play; if looking to buy shares, I suggest hedging with put options dated at least three months out, as Tesla’s stock price will most certainly move when the company announces its next set of quarterly production numbers.

This author has no position in any of the aforementioned securities.