Why Tesla Stock Fell on Friday
What happened
Shares of electric-car company Tesla (NASDAQ: TSLA) fell on Friday, declining as much as 6.9%. As of 3 p.m. EDT, the stock was down 6.1%.
The stock's decline follows news on Thursday afternoon that the automaker was rolling out yet another cost-cutting plan in an effort "to become financially sustainable."
So what
In an email to employees, Tesla CEO Elon Musk said executives, including the CFO and Musk himself, would be reviewing every payment. The "hardcore" cost-cutting program, Musk said, is necessary because the company's first-quarter cash burn rate implies Tesla has just 10 months to break even.
This cost-cutting initiative comes shortly after the electric-car company raised capital to build a better cash cushion after its cash position fell by $1.5 billion sequentially in Q1.
Now what
In Tesla's first-quarter shareholder letter, management said it expected to be free cash flow positive in Q2, but not profitable on a GAAP (generally accepted accounting principles) basis during the period. "As the impact of higher deliveries and cost reduction take full effect, we expect to return to profitability in Q3 and significantly reduce our loss in Q2," management forecast.
10 stocks we like better than TeslaWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Tesla wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of March 1, 2019
Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.