Tesla has been burning too much cash and causing too much mess, and investors are losing faith in Musk. Musk said that Tesla wanted to enter the market at a place where customers want to pay the high price, the produce a family car that is priced around 89k. It clearly didn't happen because the next two cars were luxurious and priced at above 100k. Tesla hasn't reported an annual net profit since they went public. Tesla is put on a funding treadmill, and its marketing has pushed it far for eight years, but if Tesla has a bad summer, things will look very rough and investors will lose faith completely.
https://www.bloomberg.com/news/articles/2018-04-19/tesla-s-cash-burn-has-elon-musk-s-dreams-living-on-borrowed-time
7 comments:
It is interesting to see if Tesla can solve it's production process problems. I believe if they solve these bottleneck problems they will be able to provide a reasonably priced car. However releasing cars over 100k is a little overwhelming for most families
I think Tesla as a car company may be running out of time. With production misses and earnings losses, they could stop producing cars in the near term. However, I think Tesla's biggest money maker is in their batteries. If Tesla can sell the batteries that other companies use for their electric powered cars, they could make a lot of money. There is so much potential for that battery, so it'll be interesting to follow where that goes.
Tesla has always been a cash suck and I don't see them closing doors in the near future. If he wanted, Elon Musk could hold major rounds of fundraising to keep Tesla afloat, but it is unlikely they will need to do so as he seems fairly confident that Tesla will be cashflow positive in the next few years. It is well known that Tesla is a bar above the rest in terms of the quality of American cars. I believe that if Elon can withstand a lack of support of green energy by the current administration, Tesla will be just fine. If history repeats itself, Tesla will survive and thrive just like the rest of Musk's companies have.
It it hard to say Tesla would lose its investors completely because the investors have already invested so much money, if they quit and Tesla goes bankrupt, they would lose the invested money completely. But if they continue help Tesla, in the future, they might have chance to gain profit from the investment. What Tesla doing is super challenging and I believe that most investors have foreseen it and they have prepared.
Initially, when the Tesla was just released, I thought it would go far in the car industry but has faced numerous problems rather like investors losing their faith. Like Chandler mentioned, it would be interesting to see whether their prices would be more affordable to increase demand and generate higher revenue. Also, as Lucas said, their biggest safety is their battery, which might be one of the only reasons why they might survive financially.
I think that this is definitely an issue for Tesla's stock price because it is trading at 143 times it earnings, which shows that it is a company that people think is innovative and will produce future profits. If it fails to improve, the company along with its stock price will take a hit.
Tesla have been struggling recently and Musk needs to make a change fast. Tesla cars though are fairly expensive and people are starting to lose faith in them. I am wondering to see if they will decrease the price of the car so that they can sell more or become more affordable?
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