While Monday’s trade tensions have jittered the markets, companies that have already been on shaky footing for one reason or another have fallen especially.
Shares of Tesla fell significantly on Monday, reaching the lowest point seen since January 2017 as trade-war fears are throwing a wrench in the company’s plans to expand into China.
Shares of Tesla dropped 5.2 percent during Monday’s trading session, reaching a two-year low point. At the same time, this marks the fifth straight session that Tesla’s shares have fallen, down 11 percent during the past five trading days and over 30 percent since the start of 2019.
“Fundamentally, there are heightened concerns surrounding China and that a prolonged trade dispute could have a significant negative impact on Tesla’s auto sales and margins after their request for a tariff exemption was recently denied,” said Garrett Nelson, an analyst with CFRA. Another famous figure and former hedge fund manager, Whitney Tilson, who also is bearish on Tesla, also went on to say today that Tesla’ time was up, although not necessarily because of the trade tensions. “Tesla is a zillion miles from Musk’s promise of Level 5 by the end of this year and a fleet of a million robotaxis by the end of next year,” he said in an email to investors, referring to the company’s previous announcement of a robo-taxi fleet. “Elon’s claims are FAR from being a reality.”
Nelson also went on to add that a Wall Street Journal analysis argued that Tesla was close to running out of cash, something that “really spooked investors.” Earlier in May, the company announced they had filed for a capital raise, intending to both sell common stock as well as convertible notes to help drum up more cash.
Overall, the company ended the first quarter of 2019 with $2.2 billion in cash, having burnt through $1.5 billion alone since the beginning of the year.
Tesla’s already been in a tight spot when it reported last month that its first-quarter losses were wider than expected. As Elon Musk continues to postpone his promise of a profitable Tesla until the third quarter, many investors are becoming increasingly cynical of the CEO’s claims.
Other news announcements for the automaker today came in the form of a finalized offer to acquire battery company Maxwell for $200 million. While the two have been in talks for years over potential opportunities between the two companies, Tesla only became serious about acquiring them since December 2018.
Regardless, the situation is becoming increasingly grim for the automaker as doubts and skepticism about the company continue to rise. Time will tell whether they will overcome what seems like a sea of obstacles in their path.
Tesla Company Profile
Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles.
It sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. The Tesla Roadster debuted in 2008, Model S in 2012, Model X in 2015, and Model 3 in 2017. Global deliveries in 2018 were 245,506 units. Tesla went public in 2010 and employs about 50,000 people. – Warrior Trading News
