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Tesla in ‘Code Red Situation’ as Sell-Off Exceeds 20%

Scorpio

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#1
Tesla in ‘Code Red Situation’ as Sell-Off Exceeds 20%

Dana Hull,Bloomberg 6 hours ago




(Bloomberg) -- Tesla Inc.’s stock rout following this month’s $2.4 billion capital raise intensified after a once-bullish analyst called the range of issues facing the electric-car maker a “code red situation.”

The shares have dropped in nine of the last 10 trading days, a stretch that started the day Tesla closed offerings of new stock and convertible bonds to shore up its balance sheet. In that span, Tesla has plunged more than 20% and fallen back behind Ford Motor Co. by market capitalization.

In a note Sunday, Wedbush analyst Dan Ives wrote that Tesla faces a “Kilimanjaro-like uphill climb” to hit targets for profitability in the second half of the year. He cast doubt on underlying demand for the company’s first mass-manufactured vehicle, the Model 3 sedan, and cut his price target on the stock to $230 from $275.

Once among the most bullish analysts covering Tesla -- he slashed his target from $365 just last month -- Ives said he has “major concerns around the trajectory of Tesla’s growth prospects.”

Tesla shares fell as much as 7.5% to $195.25, breaching the $200 level for the first time since December 2016. The stock had already closed at the lowest level in almost 2 1/2 years on Friday, after Chief Executive Officer Elon Musk called for a “hardcore” review of all the company’s expenses and another analyst warned of potentially severe fallout from a fatal crash involving Autopilot.

Tesla delivered just 63,000 cars in the first quarter but expects to deliver 90,000 to 100,000 cars in the second quarter, and 360,000 to 400,000 for the year. Ives said hitting the full-year target is going to be a “Herculean task” and sees 340,000 to 355,000 as a more likely scenario.

Representatives for Tesla didn’t respond to requests for comment.

Tesla’s 5.3% bonds due 2025 now yield about 9%, according to Trace, well above the average yield for a B-rated company. The bonds have trailed the broader Bloomberg Barclays Single B U.S. High Yield Index this year by around 500 basis points, according to Bloomberg Intelligence analyst Joel Levington.

“There’s little in the form of favorable credit catalysts to turn momentum around in the near term,” Levington said in a report Monday. The bond price dropped below 83 cents on the dollar and was one of the biggest losers in the high-yield market Monday, according to Trace.

Musk, 47, recently told employees in an email that he and Chief Financial Officer Zachary Kirkhorn will personally scrutinize expenditures following a worse-than-expected first-quarter loss. After having to pay off a $920 million convertible bond with cash in March, another $566 million is due in November.

When drumming up interest for a stock and debt offering earlier this month, Musk pitched investors on a future of autonomous robotaxis as the key to Tesla becoming a $500 billion company. Its market capitalization is now about $36 billion, trailing General Motors Co. and Ford.

If Tesla is unable to earn profit in the second half of the year, the company may need to raise another $1 billion to $2 billion of capital, Ives said in an interview with Bloomberg Television.

“With a code red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavors when the company instead should be laser-focused on shoring up core demand for Model 3 and simplifying its business model and expense structure,” Ives wrote in his report.

--With assistance from Yan Zhang, Gabrielle Coppola, Jonathan Ferro and Molly Smith.

To contact the reporter on this story: Dana Hull in San Francisco at dhull12@bloomberg.net
To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, ;Young-Sam Cho at ycho2@bloomberg.net, Chester Dawson

For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.

https://www.yahoo.com/finance/news/tesla-falls-analyst-says-profit-101527918.html
 

Strawboss

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#2
Oh what could have been if only I could time my shorts...
 

Zed

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#3
I wonder what a Tesla wreck would mean to the broader market.
 

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#5

TAEZZAR

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#6
Who the hell can afford one? Three years ago I went to a dealer in Brea, Calif. I was looking at their new SUV, nice car, base price $55K, OK, I can live with that. Too much for wheels up grade as well as many other up grade. All I added was the 0-60 in 2.5 seconds battery (mandatory for me, I think it was $90K, or so !!!) and just a couple of truly insignificant add ons. WHOLLY CRAP, $178K - I cannot live with that. I think they priced themselves out of the market. BUT 0-60 in 2.5 sec's AND QUIET, Ohhhhh what a woody that would make !
 

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#8
Capital Structure

Total Debt to Total Equity 280.86

Total Debt to Total Capital 73.74

Total Debt to Total Assets 46.49

Long-Term Debt to Equity 225.79

Long-Term Debt to Total Capital 59.28

% I assume, not stated.
 

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#9
Oh what could have been if only I could time my shorts...
It ain't over till it's over... Looks like March was the time to short...?

Screen Shot 2019-05-21 at 12.15.04 AM.png
 

<SLV>

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#11
I hope Tesla makes it. Fine car that looks great. Musk is an idiot, but it took a showman like that to sell the idea in the first place.
 

TAEZZAR

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#12

Buck

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#13
I hope Tesla makes it. Fine car that looks great. Musk is an idiot, but it took a showman like that to sell the idea in the first place.
Come on
It took a dorky front man, lots of media coverage on how smart this guy is and it took Billions of USD Taxpayer money to create a company that can build cars that can not only drive themselves but deliver a freshly cooked payload in a matter of minutes

Musk Is an Asshat and his car company is Our Company and it builds cars that no one really wants

It's like making a flash light with two handles, there was no purpose to make these cars with taxpayer money and tons of lies
 

Zed

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#14
I hope Tesla makes it. Fine car that looks great. Musk is an idiot, but it took a showman like that to sell the idea in the first place.
Yeah but it isn't. They had great ideas but just like the internet revolution guys they refused to learn what the industry knew works. The cars are a nightmare to build and make reliable. Repair cost are off the scale and they are ridiculous control freaks when it comes to repair a service. They are gov subsidised and supported by the faithful, they are a dud so far.
 

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#15
TSLA - 188 is about where support should kick in. If the month closes below that she is in immediate trouble! Shorts should cover @ 188 and you could see 270 odd on the rally and quite quickly. I'd be wary and cover quickly down here and sell the next rally as it looks toppy.

JMO. 2c FWIW.

TSLA-M-20190522.png
 

DodgebyDave

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#16
Technically speaking.......as far as mountains are concerned.........

Kilamangaro is an easy climb.......it's said among climbers......."you brag about everest at cocktail parties.......you brag about K2 to other climbers"

Or, Annapurna.

Not one with a road to the top!
 

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#17
Technically speaking.......as far as mountains are concerned.........
Kilamangaro is an easy climb.......it's said among climbers......."you brag about everest at cocktail parties.......you brag about K2 to other climbers"
Or, Annapurna.
Not one with a road to the top!
Check only one, but seen two more.
They ( the others ) are for crazy(ier) people.
Kali Gandaki Valley was totally cool.
What is a cocktail party ?
:)
:)
 

Zed

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#18
A part of the challenge for car producers is that "going electric" will tend to further commoditize car manufacturering. The advent of robotic computer controlled production has slowly moved the skill set from design/build to design. Anyone with the cash can buy robotic state of the art production and get a pretty good result these days. Years ago that was very difficult to acquire human skill, now less so. Once cars are a reduced to a series of plug together electronic components (think PC build) it will become harder and harder to differentiate yourself as a manufacturer. It will also become easier to startup in that space. The main threat to existing car companies will probably come in the form of a new business model taking advantage of this move forward and not a "better car". i.e. Order on the internet, customized build just in time eliminating all the stocking and holding costs built into a normally sold cars price.

It will be interesting to see if an open architecture "IBM PC" type model will appear in the auto space. For the moment Tesla is Apple early days which IMO is too much in the "control freak" camp for wide sustained success.

I expect that going forward the car space will come to mirror the PC spaces development curve.

JMO.
 

Scorpio

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#19
I hear you Zed,

when you pop the lid on the modern cars, they are plug and play modules

interesting that you put it that way, as it is quite similar, just on a larger scale

the fixes and replacements are much the same also, when a hard drive pukes, you replace the whole thing, no fixing it. Same for cars now. You don't rebuild a alternator, or turn rotors any more.
 

Zed

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#20
I hear you Zed,

when you pop the lid on the modern cars, they are plug and play modules

interesting that you put it that way, as it is quite similar, just on a larger scale

the fixes and replacements are much the same also, when a hard drive pukes, you replace the whole thing, no fixing it. Same for cars now. You don't rebuild a alternator, or turn rotors any more.
Siemens developed an inhub motor/suspension strut/regen unit. You basically just unbolted & unplugged one and replaced with another (probably on a reco/exchange basis like an alternator). One in each corner... that is the whole drive train, suspension and braking system. Connect it to a computer and you have 4WD, AWD, traction control, launch control, hill descent control, stability control etc etc... Dead freaking simply! Sealed unit, no service required until it breaks! Literally plug and play.

I've not seen it for quite a while now but I'm sure it will appear in some euro car over the next decade. Such an elegant and simple solution.
 

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As for car manufacturing IMO the future will see a Michael Dell type character come along with a web-based startup that upends the traditional build/stock/sell model. Tesla kinda went there but didn't pull it off IMO... I think that a latecomer will have the advantage if they get the timing right i.e. after the tech has developed sufficiently but before the majors have started looking to their business model to find savings. Maybe a decade or more but I think it is a strong possibility.
 

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#22
$10?!!!!!!

That may as well be $0.
 

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Buck

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#24
does it come with all the patent numbers intact?

:2 thumbs up:
 

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#25
does it come with all the patent numbers intact?
I watched a kind of doco about the Chinese cultural attitude to copying things. Apparently, it is a very high compliment to have your stuff copied and it is not seen as theft at all.

Caucasian evolution selected for high intelligence and independence, South East Asian evolution selected for slightly higher intelligence and group preference. This has been key in the West overtaking the East in development, the group over the individual mindset limits those genius mavericks that drive the west forward.

Anywhoooo, it is actually genetic... they don't truly get that it is theft, they see any knowledge as public domain. It is deeply rooted in S.E. Asian genetics, as deeply rooted as our ideas that every individual looking after themselves is the best way to keep the group alive and well!

We tend to assume we all work the same and it is just not true!
 

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#26
Ep. 469: Will Tesla Crash the Corporate Bond Market

 

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#27
Former Tesla Bull Analyst: Company Is Now a ‘Distressed Credit’ Story


Scott Olson/Getty ImagesLUCAS NOLAN
23 May 201979


Morgan Stanley analyst Adam Jonas, who previously claimed that Tesla had vast long-term growth potential, has now described the firm as a “distressed-credit and restructuring” story in a call with investors.

Forbes reports that during a recent call with investors, Morgan Stanley equity analyst Adam Jonas, a long-time Tesla bull who has recently grown skeptical of the company, expressed concerns over Tesla’s future. Issues raised on the call include signs that demand for Tesla’s electric vehicles appears to be slowing, poor sales in China, and lack of excitement over the announcement of the company’s Model Y SUV.

Jonas stated during the call that as recently as 2018 “Tesla was seen as a growth story,” but “today, supply exceeds demand, they’re burning cash. Nobody cares about the Model Y. … Tesla is not seen as a growth story, at least the feedback we were getting, which is quite one-sided … it’s seen more as a distressed credit story and restructuring story.”

According to Bloomberg, Jonas also compared Tesla’s position in the auto industry to that of the “white rabbit” at dog races: “Auto company executives describe Tesla as the white rabbit at the dog race. All the other companies know they are never going to catch the rabbit; they just hope they are the fastest dog. Tesla’s the white rabbit, but it’s attached to execution liabilities and real financial liabilities. What is the rabbit worth?”

These latest comments from Jonas come shortly after a leaked note to clients from Jonas and his team described a worst-case scenario for Tesla’s future. The client note stated: “The reduction in our bear case to $10 is driven primarily by our concerns around Chinese demand for Tesla products. Our revised bear case assumes Tesla misses our current Chinese volume forecast by roughly half to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government/regulatory attention.”

Jonas noted in his discussion about Tesla that the company passed up an opportunity to raise more funds late last year when finances for the firm looked stronger. Jonas stated: “We were thinking they would raise capital but felt there was a very high likelihood that there would be a strategic involvement, someone to fill the board, provide some know-how and some vision in addition to the Tesla vision.” Jonas added that instead “they are raising capital near the lows, no strategic buy-in.” He said: “It was all institutional.”

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or email him at lnolan@breitbart.com
 

Buck

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#28
So, Tesla is on Auto-Pilot and is going to end up in a crash?

well, that was expected
 

Zed

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#29
So, Tesla is on Auto-Pilot and is going to end up in a crash?

well, that was expected
I think it will be seen as a victim of a 'market event' that appears inevitable in the not too distant future.
 

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According to Bloomberg, Jonas also compared Tesla’s position in the auto industry to that of the “white rabbit” at dog races: “Auto company executives describe Tesla as the white rabbit at the dog race. All the other companies know they are never going to catch the rabbit; they just hope they are the fastest dog. Tesla’s the white rabbit, but it’s attached to execution liabilities and real financial liabilities. What is the rabbit worth?”

Hmmmm, like the auto industry wouldn't just buy their talent as and when needed. Kia/Hyundai got serious and hijacked Audi and BMW talent, they never looked back. Are you telling me you can't do the same to the 'white rabbit' ... LOL. Wankers.
 

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#32
TSLA is down around support a looking due for a relief rally. I'd not be selling it here, I'd be tempted to cover for now.
 

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#33
$64 Q... is Tesla the canary in the coal mine or is it just an isolated failing dream?

 

Buck

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#34
Maybe more like a "Failing Beam", "Falling Beam", have Elon getting crushed, have the beam named "Debt", "Dream Debt"

eh, it's Sunday night
 

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#36
most recent chart:


1.png
 

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#37

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#38
some pretty big gaps in that decline, meaning with authority
 

Zed

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#39
Ahem...
 

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