Tesla shares fall as pressure mounts

SHARES of Tesla fell almost 5pc yesterday ahead of the electric car maker’s announcement of quarterly production numbers for its Model 3 sedan.

Shares in Elon Musk’s $50bn (€40.6bn) venture have been reeling from a triple whammy of probes into a fatal crash in California, concerns about Model 3 production and nerves over its debt load after a credit downgrade by rating agency Moody’s.

Tesla has committed to build 2,500 Model 3s per week by the end of the quarter as a reassurance to the market that it can meet targets.

Three Wall Street analysts said the company was likely to fall short of its own estimates again, but might satisfy Wall Street’s reduced expectations.

“We like the set-up headed into Q1 deliveries as we believe sentiment is overly negative, and think Tesla may be able to exceed lower expectations,” Baird analyst Ben Kallo wrote.

Shares of the company were last down 4.4pc at $254 (€206) in heavy trading, bringing its losses this year to nearly 15pc.

Failure to meet its production targets also prompted the Moody’s downgrade last week. It said Tesla was likely to raise more than $2bn (€1.62bn) in new capital, partly to cover about $1.2bn (€0.97bn) in convertible bonds coming due by March 2019.

“We consider a small possibility of Tesla releasing supportive data this week but mainly high probability that management and the board will take more drastic action on guidance and funding to restore credibility,” Jefferies analyst Philippe Houchois wrote in a client note.

“At the current share price, either would be positive, including higher than consensus dilution from raising capital if it credibly de-risked the Model 3 ramp up.”