X

Sign Up To Our Free Newsletter

Join Now

Thanks for subscribing to our free newsletter!

ERROR

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

  • 3 minutes Texas forced to have rolling brown outs. Not from downed power line , but because the wind energy turbines are frozen.
  • 7 minutes Scientists Warn That Filling The Sahara With Solar Panels Is A Bad Idea
  • 11 minutes United States LNG Exports Reach Third Place
  • 15 minutes Joe Biden's Presidency
  • 8 hours America Makes Plans to Produce Needed Rare Earth Minerals Domestically
  • 1 hour IS SAUDI ARABIA SENDING A MESSAGE TO BIDEN
  • 8 hours U.S. Presidential Elections Status - Electoral Votes
  • 2 days Texas forced to have rolling black outs, primarily because of large declines in output from fossil fuel power plants
  • 2 days Former BP Exec "Biden not in war against oil" . . Really ?
  • 2 days Texas Supply Chain Massacre
  • 2 days Here we go - again: plug-in hybrids cost motorists more than what they were told
  • 5 hours Top Conservative Lawyer Says Trump Can Stand Trial
  • 5 hours “Cushing Oil Inventories Are Soaring Again” By Tsvetana Paraskova
  • 2 days An exciting development in EV Aviation: Volocopter
Oil Flirts With $70 After The OPEC+ Surprise

Oil Flirts With $70 After The OPEC+ Surprise

During early trading on Friday,…

Big Oil Clashes Over Fossil Fuel Future

Big Oil Clashes Over Fossil Fuel Future

Executives from major oil companies…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Tesla Faces ‘’Herculean Task’’ As Share Price Tanks

A spike in doubts about Tesla’s ability to deliver on its financial performance targets has caused a more than 20-percent drop in its stock, with nine of the ten days to May 20 registering declines, Bloomberg reports.

An additional blow to the share came from a once-optimistic analyst with Wedbush. In a Sunday note, Dan Ives had a few choice metaphors for what’s in store for Tesla. “Kilimanjaro-like uphill climb” and a “Herculean task” were among them as Ives, who until last month had a US$365 price target on Tesla’s stock, is now doubtful about the demand for the flagship affordable Model 3 as well as the company’s ability to hit its car delivery targets.

Tesla reported disappointing delivery numbers for the first quarter along with a hefty loss after its first profitable quarter ever in the last three months of 2018. Then, in late April, Elon Musk said, “There is some merit to raising capital,” after a slew of analysts had been saying it for quite a while with the Tesla CEO firmly of the opinion that Tesla could survive without additional cash.

Tesla did raise cash, though, to the tune of US$2.3 billion in a combination of US$650 million of common stock and US$1.35 billion aggregate principal amount of convertible senior notes due in 2024. The day the company offered the stock was the day its losing streak began. To date, Tesla is once again behind Ford in terms of market capitalization, and although this in itself is nothing to worry about too much, the reasons behind the selloff are certainly a cause for concern.

Tesla plans to deliver between 90,000 and 100,000 vehicles in the current quarter after in the first quarter it only delivered 63,000. It also has plans for 360,000 to 400,000 car deliveries for full-2019. Wedbush’s Ives said in his note that reaching that full-year goal would be a Herculean task. What’s more, however, is that it may end up needing more cash, to the tune of US$1-2 billion if the company doesn’t book a profit for this quarter. Related: Why China Hasn’t Slapped Tariffs On U.S. Oil Imports

“With a code red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavors when the company instead should be laser-focused on shoring up core demand for Model 3 and simplifying its business model and expense structure,” the analyst wrote.

Indeed Musk has been expanding on several fronts and two months ago showcased a new model, the Y, which also sparked criticism from investors and analysts firm in their belief that the company should focus on the matters at hand such as profitability and ramping up car deliveries rather than designing new models. Musk has claimed the Model Y—a crossover SUV with a price tag of US$47,000—will sell better than the Models S, X, and S combined but this will take time. Unfortunately, Tesla needs better sales right now.

Steps are being made in the right direction, however. Musk has called for a “hardcore” review of the company’s expenses and has suggested that more cost cuts are on the way. Yet cost cuts on their own won’t do the trick. Perhaps it really is time for Tesla to focus on its immediate business, which is selling cars that have already been made and making more if there is demand for them.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News