Tesla has lost over $5 billion in value this week — and things could get even worse (TSLA)

pulse

March 29, 2018 3:44 PM

"Production hell," a fiery crash, and a Moody's downgrade have made this week a rough one for Tesla.

Analysts are expecting another miss when the company reports delivery numbers for the Model 3, as soon as next week.

Since last Wednesday, shares of Tesla have declined almost 20% — sending the electric automaker's market cap down by more than $5 billion from $53.47 billion to $48 billion on Thursday morning, netting short sellers more than $1.9 billion in less than a month.

Last week's fiery crash of a Tesla Model X on a California freeway began the stock's decline. The NTSB said this week it was investigating the death, putting further pressure on the stock.

This week, things only got worse. Credit rating agency Moody's on Wednesday downgraded Tesla's rating one notch to B3, citing a "significant shortfall" in Model 3 production.

The company has historically struggled to meet delivery expectations. Tesla initially promised the production of 20,000 Model 3 vehicles per month by December 2017, but only delivered 1,550 in the entire fourth quarter of 2017. Tesla now says it will build 2,500 Model 3 vehicles per week by the end of the first quarter, and hit 5,000 per week by the end of the second quarter.

"We see the slow ramp and cash burn putting pressure on the stock given the debt due and EV competition coming this year and next," Cowen analyst Jeff Osborne said in a note to clients this week. The firm expects Tesla to report deliveries of 7,500 for the Model 3 next week. Osborne has a bearish $200 price target for the stock — 20% below where shares were trading Thursday.

Gene Munster of Loup Ventures told Bloomberg TV Thursday that he also expects a miss.

“With the potential for another Model 3 production timeline push, we are seeing increased investor concern over the company's cash burn and debt load,” Osborne of Cowen said.

Shares of Tesla are down 21% since the beginning of 2018.

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