Tesla getting hammered ‘all at once’
A fatal crash. A downgrade from one of America’s leading credit-rating companies. Missed delivery targets for a much-hyped electric sedan. Cash pouring out but trickling in. More than $1 billion in debt coming due.
Tesla’s problems — which have sent its stock plunging to its lowest point in a year — are legion. But will the Palo Alto electric-car maker rise above them, or sink beneath the blows?
“It’s one of the worst pictures in a long time,” said CFRA analyst Efraim Levy. “They’re getting hit with everything all at once.”
Tesla did not immediately respond to a request for comment.
On Tuesday, credit-rating firm Moody’s downgraded Tesla, citing missed production promises for the Model 3 sedan, negative cash flow, and nearly $1.2 billion in convertible bonds coming due by March 2019.
“Tesla’s rating could be lowered further if there are shortfalls from its updated Model 3 production targets,” Moody’s said in a news release.
"The rating will also be pressured if the company is unable to raise sufficient new capital to cover its late-2018 and early2019 convertible maturities, and to cover the operating cash consumption that will likely continue into 2019.”
While much attention has been on the twice-delayed production of the Model 3 — Tesla’s bid to bring electric vehicles to the masses, with a starting price of $35,000 — the firm led by CEO Elon Musk was hit with another major problem last week, when a Model X SUV burst into flames after a fatal crash on Highway 101 in Mountain View. Federal authorities are investigating the crash, and are charged with determining whether Tesla’s “Autopilot” automated-driving system was on at the time of the accident.
By Wednesday’s stock market close, Tesla’s share price had fallen to $258, the lowest since last March.
Still, the firm’s “financial shakiness” is nothing new, said Gartner analyst Michael Ramsey. “It’s literally been the case that since they’ve been a public company that they’ve been in a tenuous financial situation,” Ramsey said. “They have always been forgiven because the demand for their product has been so strong and the excitement for their brand has been so bulletproof.
"What could be scary for Tesla is anything that would be indicative that demand is falling or might fall for their product and that there might be an end for investors’ desire to buy more shares in the company.”
Salvation for Tesla can come only through bringing the Model 3 to the multitudes, analysts said. The company has said nearly a half million preorders for the sedan have come in, but only a few thousand cars appear to have been delivered so far.