Tesla’s (NASDAQ:TSLA) stock price dive another 5% Friday to its lowest mark in 2 years, -15% on the week, as it reported worse-than-expected Quarterly results accompanied with another ‘cheer-lead’ by embattled CEO Elon Musk on autonomous cars that failed to convince investors.
Tesla needs capital and the market smell blood, bringing on the worst weekly decliner for the fledgling EV maker since August last year, when Mr. Musk told the NY-T’s in a tearful interview that he was under major emotional stress.
In the options market, Tesla contracts changed hands at 2X the regular pace, with sentiment negative and the bets defensive, according to options analytics data for the week.
Tesla’s $1.8-B junk bond fell to yield 8.42%, more than 3 percentage points above the bond’s coupon rate of 5.3%. Its spread, or the premium investors demand for the added risk of holding Tesla debt rather than a safer US Treasury security, widened by about 15 bpts to a near-record 611 bpts
On Mr. Musk’s SEC dust up, a US District Court judge on Friday granted a request by Mr. Musk and the Commission for a 2nd extension to resolve a dispute over Mr. Musk’s abusive use of Twitter.
Wednesday, Tesla posted a worse-than-expected loss of $702-M for the Quarter. But, Mr. Musk said Tesla would return to profit in Q-3 and that there is “some merit” to raising capital. However, we do not believe that Mr. Musk still has access to Wall Street capital.
CEO Musk is still working to convince investors that demand for the M-3, the company’s 1st car aimed at the mass consumer market, is “insanely” high, and that it can be delivered efficiently to customers around the world. But the numbers tell a different story, the demand is soft, the logistics is hobbled, and he is not producing the car in numbers.
Tesla ended Q-1 with $2.2-B, in cash, down from $3.7-B in the prior Quarter, and the company is planning expansions including a Shanghai factory, an upcoming M-Y SUV, and other distant projects.
Tesla’s stock has now fallen 30% YTD, and the company’s market capitalization has declined to $41-B from $63-B mid-December 2018.
The grossly overvalued Tesla fell back below GM in January, and Friday it fell back below the market value of Ford, which saw its stock surge 10% after reporting a better-than-expected Quarter.
We and other analysts now expect Tesla’s revenue to expand 19% in Y 2019, compared with 83% growth in Y 2018 and 68% growth in Y 2017.
Following Tesla’s Quarterly report, 13 analysts (HeffX-LTN among them) recommend Selling the stock, while 11 recommend Buying and 8 are Neutral.
The median analyst price target is 275, + 17% from the stock’s current price at 235.14, while Cowen and Company’s is at 160, and we are at 140/share.
There is no technical support for the stock and the overhead resistance is huge.
HeffX-LTN’s overall technical outlook for TSLA is Very Bearish for the weekending 26 April 2018.
We do not recommend that civilian participants play this stock, as it is very volatile and risky,
Have a terrific weekend.