Closed the trading session of 21 May, Tesla’s stock has been plunged below $200/ stock, the lowest level since 2016. This means more than 1/5 market price of Tesla has been wiped out just in one month.
Let’s take an analysis of why this world’s largest electric and automatic car company ended in crisis.
1. Decrease in delivery
In its latest announcement, Tesla announced that the production of electric cars in the first quarter of 2019 was 77,100 units, but the number of deliveries to the buyers was only 63,000.
This means Tesla cannot deliver in time of 14,100 units and these vehicles must be stocked for delivery over the next quarter. Not ended here, the number of 63,000 units of the first quarter of 2019 delivered is also decreased 1/3 percent compared to the fourth quarter of 2018 (90,700 units).
The reasons for this decrease in delivery unit and sale revenue are because of the trouble in logistic policy of North America. Plus the strong competition from China and Europe are also causing difficulties for Tesla. Some area has recorded the growing over 600% in 2018.
Another analytics showed that the reason for Tesla’s decrease in sales revenue is because there rush in request clients to prepayment for orders before the end day of 2018 to avoid the 7,500 USD tax on each car.
The asset of billionaire Elon Musk has evaporated over 1 billion dollars after Tesla’s announcement about the decreasing amount of car’s delivered.
2. The deadly comments
Since Tesla calls for funding on the beginning of May.
Analysts have adjusted their forecast for this company’s stock, as recent information shows that the $ 2.7 billion capital mobilization at the beginning of the month can only help the company with enough capital for activities.
Following that, many top short sellers and influential traders also have bad comment about Tesla’s future stock price.
Max Wolfe – Co-founder of Multivariate Investment Fund said: “although the Tesla’s stock price has decreased about half of its price compared with $400 USD times, the current Tesla stock price is not too reasonable. Until now, it only shows more commitment than results that have been achieved”.
Another disadvantage information is that the automatic drive system of Tesla not very good as the company presented.
Moreover, the constantly sold out of “top” short-sellers like Whitney Tilson, David Einhorn and Jim Chanos also bring the market’s psychological of Bear toward Tesla’s stock.
3. Elon Musk receives a subpoena for a tweet
Last month, CEO Elon Musk have to appearance at Manhattan court for his post on social media network Twitter.
This is the result of his persistent war with the U.S. Securities and Exchange Commission (SEC). This agency alleges that the billionaire has not complied with his commitment to the government for fraud trading information on last December.
The SEC claiming that Musk had not received the consent of the lawyers before posting that information. In return, the unruly CEO says this content is not important and does not need to be censored before being published.
After the mess of Uber’s CEO about speech, the investors are more careful about the CEO statements rather than technology.
4. The sanction of Huawei
Another unexpected situation happens with Tesla is the commercial war of U.S and China.
The peak of this commercial war is the sanction of president Trump with Huawei. This will narrow the penetration way into China’s market of Tesla, one of the world’s largest consumption market of electric car.
This one again breaks down the trust of investors in the brighter future for Tesla’s stock price.
Mark Tepper – founder and president of Strategic Wealth Partners, on CNBC’s “Trading Nation ” said:
“If I were to believe Tesla’s stories, with a 35% projected earnings growth rate, even at a PEG [price/earnings to growth] ratio that’s at a premium to the market, you still can’t value the stock at over $100 a share and $100 is on the very high end,” he said.
In conclusion, in the middle of the crisis storm, there will be a lot of works for CEO Elon Musk to regain the reputation of Tesla and himself along with the company value. Let’s see what this “wizard” will do to turn around the situation.
What do you think?