Since the beginning of the year, the action of the Californian car manufacturer fell by 38%. Investors punish failures of the rise in industrial pace, but also the return of losses in the first quarter. Yet, Tesla has abundant cash and continues to borrow heavily on the markets.
It’s been years that the media give him for dead … Moreover, the short-sellers are still many to bet down on the title … But Tesla is still there and – even stronger – Elon Musk, his flamboyant founder too. And yet, the car group California has changed nothing of its precarious economic and industrial fundamentals, on the contrary, they have deteriorated at the beginning of the year.
Model 3 raises questions
First question: Is the launch of Model 3 in line with expectations? This car was intended to give a new scale to Tesla with larger sales volumes. It seems that this model has not achieved its objectives in the United States, surely victim of the decline in the premium to the electric car from $ 7,500 to $ 3,500 (and which will soon disappear). But Tesla also seems to have struggled to meet its production targets. In the first quarter, it produced only 63,000 cars, against the promised 76,000. Finally, the brand of 100% electric cars has changed several times of gear (four times) on its marketing strategy. Thus, the Model 3 was promised $ 35,000, but only for sale online. Finally, Tesla gave up on this idea, moving to over 39,000 euros the cheapest car. The group then announced closing its network of shops, before returning to this decision.
Finally, analysts question the first signs of a breathless brand in the United States. “Our research shows that most of the vehicles that Tesla produced in the first quarter were shipped to overseas markets, suggesting that demand in the US is softening,” said Jessica Caldwell, an expert at Edmunds.com and quoted by AFP. Moreover, another rumor (never belied) that Panasonic is about to suspend the project to increase the capacity of the Tesla Gigafactory in Nevada.
Second bad news: Tesla loses money again. In the first quarter, the builder announced a sharp deterioration in its financial position by announcing a loss of $ 700 million after having recorded gains at the end of the year 2018 (+ $ 139 million), despite a year-on-year loss. (a billion dollars). This underperformance in the first three months of the year is even more damaging as Tesla recorded a very strong increase in its turnover (+ 33%). But at $ 4.5 billion, revenues came out below expectations ($ 5.19 billion).
As a result of this spate of bad news, Tesla shares have been in free fall since the beginning of the year. The stock has lost 38% since January 1 and away significantly from the peaks reached last year and that made the company was better valued than General Motors which produces yet 100 times more cars. The orders of magnitude speak for themselves: at the end of 2018 Tesla was worth some $ 65 billion on the stock market (for $ 53 billion for General Motors), before being worth only $ 35 billion by mid-May.
That’s not all. The executive waltz continued at the beginning of the year with the spectacular departure of the CFO, who stepped down after quarterly results were presented. According to the press agencies, the account brings to 30 executives the number of departures in two years.
Elon Musk’s tweets still in the sights
Finally, Elon Musk is still in the sights of the Constable Stock Exchange. The founder of Tesla known for his art of buzz through Twitter has again angered the SEC by claiming in April that the manufacturer would build 500,000 cars in 2019 … Or 30% more cars compared to 2018 (350,000 cars). For the SEC, this tweet is once again likely to mislead markets. So far, Tesla has never managed to ramp up production to the level of promise. In 2015, Elon Musk announced 500,000 cars in 2018 …
That does not prevent Elon Musk to multiply the ads: 100% electric truck, a new SUV (the Model Y), a roadster … At the beginning of the year, he also announced the construction in Shanghai of a factory of electric batteries with a capacity of 500,000 cars a year. This site that could serve the huge Chinese market should be operational this summer, according to Elon Musk.
And yet, everything is not dark in the world of Tesla. The automotive group has abundant cash. At the end of its first quarterly year, Tesla had $ 2.2 billion in cash available in the bank. What we must now add a massive loan of $ 2.3 billion raised in early May. Thus, the plunge of Tesla shares in the markets is a way to put the company under pressure, but it seems that investors continue to believe in the business project led by Elon Musk.