Tesla Just Can't Catch a Stock Market Break

tesla just cant catch a stock market break

The brief uptick in share price Tesla enjoyed after beating production estimates this week was swiftly erased by a newly critical Goldman Sachs Group.

The investment bank downgraded the company on Thursday, sending its stock back down the hillside, Bloomberg reports. It’s bad news for CEO Elon Musk’s fundraising plans.

Goldman was spooked by Tesla’s $2.6 billion acquisition of solar energy company SolarCity. The bank, which managed the automaker’s $1.4 billion May stock offering, scrapped Tesla’s “buy” rating, replacing it with “neutral” after assessing the extra risk taken on by the automaker. It also cut Tesla’s price target from $240 per share to $185.

Naturally, Tesla’s stock bounced off the ceiling, reaching a five-week low. The stock started the week at $214.40, but ended it at $196.61. Another bank, Morgan Stanley, downgraded the company back in June.

Buying SolarCity is Musk’s way of realizing his goal of a company that can sell you the complete green lifestyle, but the acquisition sparked a harsh investor backlash. Too much risk at the wrong time being the chief complaint.

Musk wants extra money in the bank by the end of the year to help complete his battery-producing Gigafactory and prepare for Model 3 production. SolarCity’s need for cash to cover debt payments could weaken Tesla’s financial footing. Meanwhile, the Goldman downgrade threatens the automaker’s ability to raise more cash through future stock offerings.

Musk still needs shareholder approval to complete the SolarCity deal.

[Image: Tesla Motors]

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  • Don1967 Don1967 on Oct 10, 2016

    Tesla's stock got a HUGE stock market break when it soared to over $200 without a dime of profit. But we're reaching the part where, according to Benjamin Graham, the stock market stops acting as a voting machine and starts acting as a weighing machine.

  • SunnyvaleCA SunnyvaleCA on Oct 10, 2016

    Lots of luck to the "just can't catch a stock market break" people, but I think $30 billion market cap means you have already caught a major break. For a company to have consistent losses for 10 years in a row and still have a market cap of $30 billion is phenomenal. To me, Tesla has a very significant risk of never making it big and instead be sold off for parts for pennies on the dollar. To take that sort of risk on a startup, I'd want to think I had a chance of making a 10x return. But for Tesla to make 10x return they'll need a market capitalization as large as GM, Ford, Toyota, and Honda all put together.

  • 2ACL What tickles me is that the Bronco looks the business with virtually none of the black plastic cladding many less capable crossovers use.
  • IBx1 For all this time with the hellcat engine, everything they made was pathetic automatic scum save for the Challenger. A manual Durango, Grand Cherokee, Charger, 300C, et al would have been the real last gasp for driving enthusiasts. As it is, the party is long over.
  • MaintenanceCosts The sweet spot of this generation isn't made anymore: the SRT 392. The Scat Pack is more or less filling the same space but it lacks a lot of the goodies, including SRT suspension, brakes, and seats. The Hellcat is too much and isn't available with a manual anymore.
  • Arthur Dailey I am normally a fan of Exner's designs but by this time the front end on the Stutz like most of the rest of the vehicle is a laughable monstrosity of gauche. The interior finishes suit the rest of the vehicle. Corey please put this series out of its misery. This is one vehicle manufacturer best left on the scrap heap of history.
  • Art Vandelay I always thought what my Challenger really needed was a convertible top to make it heavier and make visability worse.