As you might have heard, Tesla’s stock is falling. As usual, this small change is being met with a huge uproar. The rumour mills are in overdrive as the stock falls 36% this fiscal year. Elon Musk is likely not too concerned; his net worth resting at $13 billion. The rest of the world, on the other hand, is wondering what happened.
The biggest factor in the minds of investors is the feasibility of Tesla’s ambitious project. This past year, the company’s production rate has been low compared to demand, which is making investors think Tesla might not be the ace in the hole they thought it would be. The company produced 17,400 cars in their fourth quarter, which just barely meets the company’s production projections.
On the other hand, most car manufacturers start slow with production, so as to avoid mass-producing a mistake. We don’t normally notice because our cars come from industry giants who permeate the market, but with Tesla, people are noticing because there just aren’t that many Tesla cars yet. Though their production is by no means keeping up with demand, it is keeping up with industry standards.
A Barclays auto analyst, Brian Johnson holds quite a bit of sway within the auto investors’ community. Recently, he lowered his “target price” (for buying) for Tesla’s stock from $180 to $160. People are being told that the stock should cost them less, so it’s value is dropping. The drop in price sites the issues covered in this blog post, as well as the usual concerns about Musk’s ability to make Tesla happen.
Musk’s Personal Loans
Elon Musk has pledged more than 7.4 million (of his 35 million) shares of company stock to secure personal loans worth about $1.6 billion, according to company disclosures. Tesla has commented on several occasions the devastating affect Musk selling his stocks would have on the company, yet the personal loans are still influencing investor confidence.
This is something that Musk has been doing for years, but as other factors come into play, the news about his personal loans are being recirculated. As is typical with business, a small amount of bad press will bring up any old bad press people had forgotten about.
Model 3 Speculations
Some people are still speculating that the Model 3 release date will be postponed. This is not an unfounded speculation, considering he has postponed release dates in the past with his Model X. Pictures are to be released late next month, so that may change a few people’s minds. Much like Musk’s personal loans, this is being brought up solely because of the other issues with Tesla’s stock; there is no concrete reason to believe the car will be released late, but in the stock market, when a stock falls, so does the sky.