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Shares of Tesla (TSLA - Free Report) plummeted over 7% on Monday morning, as part of a roughly 25% month-long decline. The electric car maker’s recent downturn has seen investors flee based on a slew of major concerns. Let’s take a look at four of the biggest.
Model 3 Production
Analysts at Jefferies believe that Tesla most likely fell short of its own first quarter Model 3 production goals. Tesla estimated that it would deliver 10,000 mass-market Model 3s in the period and eventually reach a production target of 2,500 vehicles per week.
There is no guarantee that Tesla will fall short of its own production projections. But Jefferies analyst Philippe Houchois wrote in a note to clients on Monday that it’s “about the magnitude of the miss.”
It has been more than a week since a Tesla crash sparked new worries about the company’s semi-autonomous autopilot system. Tesla recently released some of its initial findings on the deadly accident, which stated that the driver had time to put his hands back on the wheel and react to autopilot-related warnings.
However, the National Transportation Safety Board announced that it is “unhappy” that Tesla revealed some detailed information about the accident because the NTSB’s probe into the crash is ongoing.
Recall
In a move that might scare investors even more than an accident, Tesla announced late last week that it will voluntarily recall roughly 123,000 Model S sedans. The electric automaker issued the new recall after Tesla found that some of its bolts could corrode in cold weather and possibly lead to a power-steering failure.
The recall only impacted Model S vehicles built before April 2016, but Tesla’s latest recall marks the third time the Model S has been recalled since it first came to market. This latest recall also accounts for a substantial portion of total Tesla vehicles sold.
Tesla sold just 102,807 cars last year, and the more expensive Model S sedan and Model X SUV made up most of the sales.
Debt Concerns
Last week, Moody's downgraded Tesla's credit ratings to “negative” from “stable,” pointing directly to Tesla’s Model 3 production woes and worsening financial picture. This downgrade helped illuminate Tesla’s current debt figures.
The company has to cover $1.2 billion of debt that comes due by 2019. On top of that, Tesla’s 2025 bonds were yielding roughly 7.7% last week, while the notes sunk to a low of 86 cents on the dollar.
Tesla will clearly take on new debt in order to boost production of its mass-market Model 3, but it will likely come at far less favorable rates as Tesla continues to bleed cash.
The company’s inability to turn a profit is compounded by the fact that while Tesla and CEO Elon Musk overpromise and under deliver on production, the likes of Ford (F - Free Report) , General Motors (GM - Free Report) , Toyota (TM - Free Report) , Volkswagen , and other proven automakers have entered the electric vehicle market.
Worse still, our current Zacks Consensus Estimates are calling for Tesla to post an adjusted loss of $7 per share in its current fiscal year, even as revenues are projected to climb by 60%.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Image: Bigstock
4 Key Reasons for Tesla's (TSLA) Recent Selloff
Shares of Tesla (TSLA - Free Report) plummeted over 7% on Monday morning, as part of a roughly 25% month-long decline. The electric car maker’s recent downturn has seen investors flee based on a slew of major concerns. Let’s take a look at four of the biggest.
Model 3 Production
Analysts at Jefferies believe that Tesla most likely fell short of its own first quarter Model 3 production goals. Tesla estimated that it would deliver 10,000 mass-market Model 3s in the period and eventually reach a production target of 2,500 vehicles per week.
There is no guarantee that Tesla will fall short of its own production projections. But Jefferies analyst Philippe Houchois wrote in a note to clients on Monday that it’s “about the magnitude of the miss.”
Tesla, Inc. Price
Tesla, Inc. Price | Tesla, Inc. Quote
Accident
It has been more than a week since a Tesla crash sparked new worries about the company’s semi-autonomous autopilot system. Tesla recently released some of its initial findings on the deadly accident, which stated that the driver had time to put his hands back on the wheel and react to autopilot-related warnings.
However, the National Transportation Safety Board announced that it is “unhappy” that Tesla revealed some detailed information about the accident because the NTSB’s probe into the crash is ongoing.
Recall
In a move that might scare investors even more than an accident, Tesla announced late last week that it will voluntarily recall roughly 123,000 Model S sedans. The electric automaker issued the new recall after Tesla found that some of its bolts could corrode in cold weather and possibly lead to a power-steering failure.
The recall only impacted Model S vehicles built before April 2016, but Tesla’s latest recall marks the third time the Model S has been recalled since it first came to market. This latest recall also accounts for a substantial portion of total Tesla vehicles sold.
Tesla sold just 102,807 cars last year, and the more expensive Model S sedan and Model X SUV made up most of the sales.
Debt Concerns
Last week, Moody's downgraded Tesla's credit ratings to “negative” from “stable,” pointing directly to Tesla’s Model 3 production woes and worsening financial picture. This downgrade helped illuminate Tesla’s current debt figures.
The company has to cover $1.2 billion of debt that comes due by 2019. On top of that, Tesla’s 2025 bonds were yielding roughly 7.7% last week, while the notes sunk to a low of 86 cents on the dollar.
Tesla will clearly take on new debt in order to boost production of its mass-market Model 3, but it will likely come at far less favorable rates as Tesla continues to bleed cash.
The company’s inability to turn a profit is compounded by the fact that while Tesla and CEO Elon Musk overpromise and under deliver on production, the likes of Ford (F - Free Report) , General Motors (GM - Free Report) , Toyota (TM - Free Report) , Volkswagen , and other proven automakers have entered the electric vehicle market.
Worse still, our current Zacks Consensus Estimates are calling for Tesla to post an adjusted loss of $7 per share in its current fiscal year, even as revenues are projected to climb by 60%.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>