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Tesla Bankruptcy Not So Far Fetched, Says Analyst

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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  • Tom on April 07 2018 said:
    Tesla is one company that is diligently working to make the world a better place. Clean unpolluted air for us and our children. Now is Scott Pruitt doing that? Not hardly, he's too busy writing waivers to profitable refiners so tbey can avoid ethanol and keep their dirty fuels dirty. Is the oil industry interested in cleaner fuels? Not hardly, to.busy picking up "Trick or Treat" RVO Waivors from the EPA, so they can avoid that air cleaning ethanol. So if we want to give our children cleaner air, well, Tesla Is The Only Game In Town. What's Wright will eventually win out. Air Polution is not a winning hand. Big Oil, with EPA's help, is truly flying their airplane into the ground. Happy Landings?
  • John on April 06 2018 said:
    "Even if Tesla were to finally hit a Model X production target, Tesla would continue to face financial challenges."

    Seems to be a recycled article from when the Model X was having production issues. Seems you didn't change all the X's to 3's.
  • Kr55 on April 06 2018 said:
    "Chief Executive Elon Musk has told investors his electric car company will stop burning cash and turn a profit this year"
    - April 2016

    Elon is a generational salesman, that's for sure. I see he rushed out a bunch of cars that will probably be back in the shop for warranty work to be able to tout 2k of model 3 deliveries last week for this round of salesmanship.
  • Louis on April 06 2018 said:
    You truly have to have blinders on to own Tesla stock...
  • Markp1950 on April 06 2018 said:
    Old news. What happens yesterday means nothing about what happens tomorrow. Delivery chart shows real exponential growth. Changing everything. Villas trying to cover their losses. Only thing that might cause problems is Trump screwing up the economy. Would affect Ford and GM too..
    [Thompson argues, is still losing $2 billion per year and $20,000 per vehicle on its $100,000 vehicle.]
    Stupid lie. They are MAKING MONEY on every car. But reinvested in growth. Expanding factories. Expanding lines. And ESPECIALLY the charging network. All money that other guys will have to spend.
  • Dinokiller on April 06 2018 said:
    Ah, the petrochemical industry H8Ts Coal, Nuke, Hydro, Solar powered vehicles...
    Suck it up
  • TheWay on April 06 2018 said:
    I feel sorry for his clients. They are going to be running with pitchforks after him.

    Tesla has already said they are producing the Tesla Model 3 with a gross profit. Which means most of the painful portion of the cash burn is over and they won't be needing to raise any more money this year.

    That is not to say they will be net profitable, but they should be free cashflow positive. Which means they won't be running out of cash any time soon.
  • Corvettekid on April 06 2018 said:
    All you need is one SWF -- like the Saudi's -- or Warren Buffet or Bill Gates or their foundation to make a $5 billion preferred equity investment and the Chapter 11 talk is off the table.

    Yes, a meltdown in the stock price leading to bond price pressures and a vicious circle are theoretically possible. But there are so many Wall Street firms and investors and bigwigs who have a vested stake in avoiding a TSLA bankruptcy, not to mention the value of the car/name/trademarks, that a bankrutpcy is HIGHLY unlikely anytime in the next few years.

    You'd need a complete shutdown in the capital markets like in 2008 to cripple TSLA. And even in 2008 GE got an equity infusion from Buffet.

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