Tesla’s (NASDAQ:TSLA) Suppliers See Bankruptcy Ahead
Many of the Top executives at auto suppliers surveyed by an industry association said they were worried about Tesla (NASDAQ:TSLA) filing for bankruptcy in the near future, and see Tesla as a financial risk to their companies.
“We are definitely not going bankrupt,” Tesla CEO Elon Musk told the WS-J
The survey of members of the Original Equipment Suppliers Association’s council says that over 33% of respondents said they were worried about Tesla filing for bankruptcy.
Additionally, 18 of the 22 respondents reportedly said in the survey that they believe Tesla to now be a financial risk to their companies.
Other suppliers separately say that Tesla does not always pay for services on time, something CEO Tesla CEO Elon Musk said occurred not because Tesla lacked funds, but “because we’re arguing whether the parts are right.”
Fully 23 of the 35 of the executives who are part of the prominent suppliers’ association that responded to the survey are current or former Tesla suppliers.
Tesla estimates that increased deliveries will help generate several hundred millions more in cash by the end of September compared to 3 months earlier.
“We are definitely not going bankrupt,” Mr. Musk said.
The survey was conducted between 26 July 26 and 8 August the beginning of a challenging frame at Tesla, during which the company has been under public scrutiny.
Then on 7 August Mr. Musk Tweeted the ‘420’ going private Declaration saying funding was secured to take the company private.
The Tweet prompted questions regarding the ethics and legality of the announcement, plus that US Securities and Exchange Commission is investigating Mr. Musk’s motivations.
Then last week, Mr. Musk said in a statement on Tesla’s website that he used the phrase “funding secured” to indicate that he believes there was “no question” that Saudi Arabia’s Public Investment Fund would provide funding to convert Tesla into a private company. The PIF appears to have no interest in Tesla other than their 5% stake acquired in the open market.
Analysts including me see Mr. Musk as a man that is close to his physical and mental limits. And unless he can recharge his batteries the likelihood of going private tanks and stock’s decline increases.
HeffX-LTN’s overall outlook for TSLA is Neutral to Bearish.