Tesla Stock Crashes to Lowest Levels, Unseen Since Obama Presidency
Tesla’s stock hits a new low. | Source: Shutterstock
By CCN: This week Tesla stock crashed to its lowest levels since Obama was president. The electric car maker suffers from political uncertainty regarding the electric car maker’s prospects in China, as well as questions over Tesla’s ability to deliver on its premium stock valuation. A Tesla analyst at Evercore ISI says:
“The only thing that can justify such valuations is supernatural growth and best in class execution. Both are in question right now.”
Low Q1 earnings, low solar cell sales, unflattering publicity about random incidents with Tesla cars have added to Tesla’s woes. In response the company is continuing to rapidly innovate its technology and business model.
The independent U.S. equity research company noted that Tesla, like other automakers, is in a cost intensive business that burns through cash. Tesla’s recently had to offer $2.35 billion in Tesla stocks and “junk” bonds to shore up its balance sheet after following up two profitable quarters with a Q1 2019 in the red more than half a billion dollars.
But Tesla is also a heavy innovator making major long term bets on emerging technologies for which the markets and supporting infrastructure have not yet grown to scale. That’s a cash intensive strategy up front, but it can be massively profitable in the long run when executed competently by a large company with a strong brand and commanding market share.