SAN FRANCISCO (Reuters) – Tesla Inc. ‘s share fell more than 5% on the Friday for the lowest price in two years, completed by a tough week that included worse-than-expected quarterly results and a pitch by Chief Executive Elon Musk on autonomous cars not to win the investors.
FILE PHOTO: The logo of Tesla is to see in Taipei, Taiwan, August 11, 2017. REUTERS/Tyrone Siu/File Photo
With investors betting Tesla will soon be raising capital, the stock has fallen from 14.1% for the week to the lowest level since January 2017, before the launch of the Model, the 3 sedan aimed at creating the electric car maker profitable.
If Tesla closes at the current price of $234.90, the decline for the week, the worst since June 2016, when Tesla offered to buy SolarCity in a $2.8 billion deal Musk described as a “no brainer.”
In the options market, Tesla contracts changed hands at twice the normal speed, with trading volume set to hit a seven-month high of 712,000 contracts at the end of the session, according to options analytics firm Trade Alert. The market sentiment was leaning toward a defensive bet, the data showed.
Tesla’s $1.8 billion in junk bond fell half a cent to yield 8.42%, more than 3 percentage points above the bond’s coupon interest rate of 5.3%. The spread, or the premium investors demand for the extra risk of holding Tesla debt instead of safer U. S. Treasury security, widened by around 15 basis points to a near-record 611 basis points.
A positive development for the Tesla: a U.S. Court judge on Friday granted a request by Musk and the Securities and Exchange Commission for a second extension of the resolution of a dispute over the Musk is using Twitter.
On Wednesday, Tesla posted a worse-than-expected loss of $702 million for the March quarter. Musk said Tesla would return to profit in the third quarter, and that there is “some merit” to attract capital.
Musk is still battling to convince investors that demand for the Model 3, the first car aimed at the mass consumer market, is “insanely” high, and that it can be delivered efficiently to customers around the world.
Tesla ended the first quarter with $ 2.2 billion, a decrease of $ 3.7 billion in the previous quarter, and the company is planning expansions, including a Shanghai factory, an up-and-coming Model Y SUV, and other projects.
(Image: Tesla’s cash link: tmsnrt.rs/2DyJjX6).
On Monday, Musk will host a self-driving event, in which he predicted Tesla would have more than a million autonomous vehicles next year. Some analysts have seen the presentation as a way to distract the attention from questions about the question, is the pressure on margins, increasing competition and even Musk’s ongoing battle with the US regulators.
Tesla’s stock has now fallen from 29% in 2019, and the company’s market capitalisation has fallen to $41 billion from $63 billion in mid-December.
(Image: Tesla’s shrinking market cap link: tmsnrt.rs/2Dwd62r).
Tesla’s share has fallen below the level of the most recent capital increases.
FILE PHOTO: Tesla CEO Elon Musk attends the Tesla Shanghai Gigafactory groundbreaking ceremony in Shanghai, China, January 7, 2019. REUTERS/Aly Song/File Photo
(Image: Tesla’s capital increases link: tmsnrt.rs/2DAsQS2).
Analysts now expect Tesla’s revenue expand 19% in 2019, compared with 83% growth in 2018 and 68% growth in 2017, according to Refinitiv.
Following Tesla’s quarterly report, 12 analysts recommend selling the stock, while 11 recommend buying and eight are neutral. The median analyst target price is € 275, up to 17% of the stock of the current price. Berenberg analyst Alexander Haissl has the most optimistic target price at $500, while Cowen and Company’s Jeffrey Osborne has the lowest, at $160, according to Refinitiv.
Reporting by Noel Randewich, additional reporting by Saqib Ahmed in New York; Editing by Jonathan Oatis and Chizu Nomiyama