Tesla Inc. (NASDAQ 🙂 seems to be trapped in the grip of a never-ending negative news cycle. But the latest headlines are devastating for their stock. The shares of the electric car manufacturer collapsed 11% on Thursday after the company during the first quarter, making even the most avid bulls nervous about their future growth prospects
Tesla said last week that it had delivered 63,000 vehicles in the three months that ended in March, compared to 90,966 in the fourth quarter of 2018. Demand was hurt by reduced fiscal incentives in the US home market while the company struggled had to get the cars for consumers in Europe and China. Deliveries of model 3 totaled 50,900 vehicles, the average analyst estimate for 51,750. This bad news also comes at a time when the CEO, Elon Musk, made the Model 3 the hub of his global growth strategy
Deliveries for the more expensive, older models of Tesla, the S and X, presented an even more disturbing picture of the demand for 2019. The turnover of both fell by more than half compared to the previous quarter. Trading at $ 274.96 at the end of Friday, Tesla shares have lost about 5% of their value in the past week, and 18% since early 2019. This pullback shows the nervousness of investors who now increasingly believe that Tesla -the-fly makes decisions and responds to challenges without thinking deeply.
Doubt about increase over Tesla's growth projections
If you do not follow the story of Tesla as closely as we do, you may wonder what a quarter of a quarter difference could make in the life of a car manufacturer with a promising product that was still at an early stage of his growth is bicycle. Why the drastic reaction of the market? The answer is that it confirms investors' greatest fear of the credibility of Tesla's latest growth forecasts. If those growth assumptions were based on an over-optimistic scenario, investors have little reason to cling to the Tesla share, which has experienced many setbacks in the past year
The largest was Musk's unsuccessful attempt to take Tesla privately, which led to a regulatory investigation, resulting in a fine of $ 40 million and Musk being excluded from the company's presidency. The US Securities and Exchange Commission (SEC) brought Musk to court after his bilingual bi-count of February 19 about Tesla's car production numbers that the regulator claims to have been misleading and violated its prior settlement terms. In an order on Friday, a Manhattan court gave both parties until 18 April to reach a solution. If they don't do that, the judge said she would decide whether to scorn Musk.
Tesla & # 39; s bulls still find comfort in this gloomy situation. The company, in its first quarter output output, confirmed its earlier projections of 360,000-400,000 vehicle deliveries in 2019, due to strong demand from Europe and China. In North America, the Model 3 was again the best-selling medium-sized premium sedan, which sold 60% more units than the number two, according to Tesla's statement.
However, we find it quite difficult to be positive about Tesla's shares, and that is also true of many leading Wall Street analysts. According to Joseph Spak of RBC Capital Markets, the delays in deliveries from Model S and X will negatively impact Tesla's revenues in the first quarter and potentially shave more than $ 1 billion in Tesla's estimated revenues.
For us, the main concern is Tesla's management of his cash flows at a time when demand for his cars is falling and the money has to be settled for forging debts. Tesla had around $ 3.7 billion in cash and equivalents by the end of the previous quarter, but had to pay a $ 920 million convertible bond in February. According to Bloomberg data, the car manufacturer has a $ 566 million note available in November.
Bottom Line
Tesla & # 39; s latest demand forecasts for its electric car & # 39; s confirm our doubts about the company's ability to remain profitable in 2019. With the company's small cash reserves, its marketing strategy in difficulty and its CEO in a constant struggle with the US regulator, see Tesla shares not stabilizing quickly. Investors should avoid taking a position in the stock when so much uncertainty has clouded the prospects for the future growth of the company
