Tesla in ‘code red’ as sell-off after capital raise exceeds 20%

Bloomberg

Tesla Inc.’s stock rout following this month’s $2.4 billion capital raise intensified after a once-bullish analyst called
the range of issues facing the electric-car maker a “code red situation.”
The shares have dropped in nine of the last 10 trading days, a stretch that started the day Tesla closed offerings of new stock and convertible bonds to shore up its balance sheet. In that span, Tesla has plunged more than 20 percent and fallen back behind Ford Motor Co. by market capitalisation.
In a note, Wedbush analyst Dan Ives wrote that Tesla faces a “Kilimanjaro-like uphill cli-mb” to hit targets for profitability in the second half of the year. He cast doubt on underlying demand for the company’s first mass-manufactu- red vehicle, the Model 3 sedan, and cut his price target on the stock to $230 from $275.
Once among the most bullish analysts covering Tesla — he slashed his target from $365 just last month — Ives said he has “major concerns around the trajectory of Tesla’s growth prospects.”
Tesla shares fell as much as 7.5 percent, breaching the $200 level for the first time since December 2016. The stock had already closed at the lowest level in almost 2 1/2 years, after Chief Executive Officer Elon Musk called for a “hardcore” review of all the company’s expenses and another analyst warned of potentially severe fallout from a fatal crash involving Autopilot.
Tesla delivered just 63,000 cars in the first quarter but expects to deliver 90,000 to 100,000 cars in the second quarter, and 360,000 to 400,000 for the year. Ives said hitting the full-year target is going to be a “Herculean task” and sees 340,000 to 355,000 as a more likely scenario.