Tesla’s first-quarter earnings report did not inspire confidence, even among Tesla believers. The electric carmaker posted a loss of $702 million for the quarter, along with earnings per share results that missed estimates by a wide margin. At the meantime, its cash position dwindled to $2.2 billion, down from $3.7 billion towards the end of the previous quarter. The disastrous results in obtaining a report to investors) led Wedbush analyst Dan Ives to compose he is throwing in the white towel on the EV device, pulling it from purchase to neutral after staying near the stock via its various troubles due to its transformational EV opportunity.
To this stage, in our 20 years of covering technology stocks on the Road, we consider this quarter as one of the main debacles we’ve seen while Musk & Co. Within an episode from the Twilight Zone behave as if demand and sustainability will return to the Tesla story, he composed. Ives added the image of Tesla’s demand is changing rapidly, and that the carmaker hasn’t adjusted to the evolving landscape for EVs, such as more competition on the horizon and a phase from tax credits for the vehicles, with a thoughtful plan to market and distribute its own cars.
Earlier this season, Tesla painted a sales picture going forward, announcing cost cuts along with also a decision, followed by a change, it’d move to online-only sales. Another question mark for Tesla investors: its own cash balance, and the way that it’ll pay off its own debt obligations and challenging initiatives like a Gigafactory in China to build batteries. While Chief executive officer Elon Musk has insisted that Tesla won’t have to raise money on the reasons that it will be rewarding from now on. He conceded that there’s some merit to increasing capital on a call with investors on Wednesday. It looks increasingly likely they’ll have to do so, according to Ives. At this time the writing is on the wall that Tesla will likely have to raise $3 billion+ of capital in the near term to maintain its capex and debt demands given its current profitability path, which is another black cloud on the name with an inexperienced CFO now at the helm, he added. Shares of Tesla were trading down 4.1% to $248.03 and therefore are down more than 25% year to date.