Musk and Tesla shareholders are taking a beating, as the electric
carmaker’s stock fell to its lowest point in over a year on
shares continued their selloff from a day earlier, tumbling 8% in
trading Wednesday on news that U.S. investigators were looking into
a fatal March 23 crash involving a Tesla vehicle, and ongoing
worries about the company’s cash crunch. That follows on an 8% slide
market value of Tesla fell about $8 billion in the last two days to
$43.9 billion, below that of General
Motors($49.4 billion). Elon Musk’s stake
in the company also fell roughly $1.8
billion to $11.5 billion in the same period, based on the most
recent filings with the Securities and Exchange Commission.
came after the National Transportation Safety Board announced
Tuesday that it was looking into a fatal crash in California last
week involving a Tesla Model X and, possibly, its Autopilot feature.
It’s not the first time Tesla has been under
scrutiny for the feature, with the NTSB saying
last year that the system required more safeguards following another
crash in 2016.
to the extensive damage caused by the collision, we have not yet
been able to retrieve the vehicle’s logs,” Tesla said
in a statement about the most recent crash. “We are
currently working closely with the authorities to recover the logs
from the computer inside the vehicle. Once that happens and the logs
have been reviewed, we hope to have a better understanding of what
to those concerns: Moody’s downgraded the cash-burning carmaker’s
credit rating to a B3 from a B2 on Tuesday, putting an overall
negative outlook on the firm. The credit rating agency said that
Tesla would likely need to raise at least $2 billion in the near
term to fund the production of its all-important Model 3 mid-market
of that car has fallen short of
for Tesla, raising those funds to fuel its continued growth may not
be so easy.
lower share price begets a lower share price,” analyst Adam Jonas of Morgan
Stanley mused in a Wednesday note to
clients, following news a day earlier about the ratings agency.
Tesla has consistently posted negative free cash flows, and has funded
itself through customer deposits, and by selling
shares and bonds. “For a company widely expected to continue to fund
its strategy through external capital raises, a fall in the share
price can take on a self-fulfilling nature that further exacerbates
the volatility of the share price.”
meanwhile added that Tesla’s rating could fall further should the
company fail to raise funds or miss additional Model 3 targets.
Osborne, an analyst from Cowen’s, sees Tesla’s Model 3 deliveries
coming in below target for the first quarter of 2018. Tesla is
expected to report those figures in the first week of April. On the
production front, Osborne expects Tesla to come in below its 2,500
per week estimate for the first quarter.
on user reported registration data online, Osborne says he expects
Tesla to announce Model 3 deliveries of about 7,500 for the first
quarter, below the 11,000 consensus.
declined to comment toFortune regarding
the Moody’s downgrade.