As Tesla ramps up the production of its flagship Model 3 electric sedan while simultaneously facing increased scrutiny for production delays and a fatal crash that involved its heralded autopilot feature, an analyst is warning the auto manufacturer’s stock is going to crash within three to six months.
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“I said in a note to my clients that in the next three to six months the stock is going to crash,” Vilas Capital Management CEO John Thompson told FOX Business’ Stuart Varney on Thursday. “And because of that, they’re going to be on the verge of bankruptcy, because they need the capital markets to survive. They have to raise money.”
Thompson isn’t the only one who has become increasingly leery of Elon Musk’s auto empire: In late March, following the deadly crash in California, Moody’s downgraded Tesla’s credit rating from Stable to Negative, citing large cash burn and missing production rates.
Now Musk is personally overseeing production, reportedly because of Tesla’s failure to hit a production benchmark of 2,500 Model 3 cars per week by the end of March. After falling deep into the red, Tesla stocks have rebounded slightly, up 4.08% on the promise of production acceleration.
But Thompson warned that even if it hits its production goals, Tesla is likely to continue struggling financially. Tesla’s currently electric vehicle sells for $100,000, and though fairly popular, the auto manufacturer is still hemorrhaging money, losing $2 billion per year and $20,000 per vehicle, he said. He found it unlikely the Model 3 -- which will sell for $45,000 -- would make the company money.
“The company is saying we’re going to make money miraculously on this Model 3, but my sense is that’s actually hype, and the reality is they’re going to lose more money on this car,” he said.
Musk made light of the company’s recent production woes on Sunday, posting an April Fool’s Day Joke that the company had “gone completely and totally bankrupt.”