Electric-vehicle (EV) maker Tesla Inc.’s shares extended declines in pre-market trading on Friday, as the impact of chief executive Elon Musk’s unusual and heated conference call continues to weigh on the stock.
Shares of Tesla were down by 0.3 percent to $283.36, after Musk’s refusal to answer what he described to be tedious questions about the company’s finances sent the stock falling as much as 7 percent to nearly 10 percent on Thursday.
It has lost more than a quarter of its value since reaching a high of $389.61 in September, due to reports of production delays of the Model 3 sedan, which is seen as significant factor to its profitability.
The heated conversation started after two analysts asked about Tesla’s capital requirements, given Model 3’s capital expenditure forecasts.
The Palo Alto-based firm had a better-than-expected quarter, posting narrower quarterly net loss of almost $785 million, but Musk’s behavior during the exchange was seen by some analysts as a worrisome sign.
Analyst Jamie Albertine, who is optimistic on the automaker and has a price target of $385, said financial figures were in line with his expectations, though Musk's attitude on the conference call is a big issue, and that it tarnished what otherwise was a good first-quarter with some upbeat signs.
Since Musk owns 22 percent of the company and its top four investors, including him, have over 40 percent, this gives him some kind of freedom to dismiss analysts’ concerns.
Tesla’s Cash Position
Even though it was positive quarter, the update has also raised concerns over Tesla’s cash burn of more than $1 billion, and questions about how it exactly plans to lift margins, while stepping up Model 3 production.
Tesla’s CEO reiterated that the company will not require additional capital this year and that he specifically does not plan to raise any, but even Tesla bulls were uncertain about its cash position. The company expects lower capital spending this year and income by the second half.
The firm has continuously failed to keep its word on vehicle production as well as with its past promises of not needing to raise funds. It has raised capital every year since its initial public offering (IPO) in 2010 and issued debt twice last year.
Tesla also had about $2.7 billion in cash available by the end of March and has spent about $3.9 billion during the past 12 months, according to data by a software group.
Musk already assured that they can produce cash and profit in the third and fourth quarter if they meet weekly target of producing 5,000 Model 3s in two months.
However, the EV maker might eventually need money for its first Gigafactory in China and upcoming vehicles, including a semi truck and the Model Y crossover, which it now expects to be introduce in early 2020, instead of late 2019.
Albertine said Musk does not need to raise capital right away, but he may want to consider appointing a chief operating officer.
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