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Just days after Elon Musk’s not-so-well-received April Fool’s tweet that spoke of Tesla’s imminent bankruptcy in jest, one analyst is predicting that that doesn’t seem so foolish after all.
The EV manufacturer—which has one of the most loyal customer bases of any brand—will see its stock crash within six months, according to John Thompson, CEO of Vilas Capital Management in an interview with Fox Business on Thursday. Thompson added that this prediction was passed on in a note to its clients.
The crash, says Thompson, could usher in a bankruptcy for Tesla, because it relies on the capital markets to survive.
Tesla has faced a series of setbacks in recent months, including a downgrade from Moody’s, a fatal crash in California, and missed production targets of its beloved Model 3 just Tuesday. The Model 3 production woes have caused Musk, he said in a tweet, to resume sleeping on the factory floor—a practice Musk used to back in 2016 when The Model X SUV was faced with a variety of issues including quality problems and parts shortages.
Tesla has failed to reach almost every—if not every—production target that Musk has set for the Model 3, but Tesla’s problems go well beyond production misses, Thompson explains. Even if Tesla were to finally hit a Model X production target, Tesla would continue to face financial challenges. Tesla, Thompson argues, is still losing $2 billion per year and $20,000 per vehicle on its $100,000 vehicle. The Model 3, which will sell for about half that, is unlikely to be a bearer of significant profits for the EV manufacturer.
Tesla stock (NASDAQ: TSLA) was trading up (+$16.29, +6.54%) in afternoon trading at $305.72, up nearly $53 per share from its yearly low reached on April 2 of $252.48.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.