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Tesla Falls When Analyst Says Company Plays "Code Red"



(Bloomberg) – Tesla Inc. shares fell below $ 200 for the first time in more than two years as the car maker faced a "Kilimanjaro-like rise" in the second half of the year to meet its profitability targets. [19659002] In a Sunday note, Wedbush analyst Dan Ives described the electric car manufacturer's predicament as a "Code Red Situation" and lowered its price target to $ 230 from $ 275. Ives has canceled its $ 365 goal last month.

As one of Tesla's most optimistic analysts, Ives said he "has major concerns about Tesla's growth prospects and the underlying demand for Model 3 in the US over the coming quarters.

The Tesla share fell 7.5% to $ 195.25 and was trading at $ 200.68 on Monday at 11.30 am in New York. The stock closed Friday at its lowest level in nearly two and a half years, after Musk had demanded a "hardcore" review of all of the company's spending and an analyst warned of potentially serious consequences of a fatal crash with autopilot.

Tesla delivered only 63,000 cars in the first quarter, but expects to deliver 90,000 to 100,000 cars and 360,000 to 400,000 cars for the year in the second quarter. Ives said reaching the full year target will be a "Herculean task" and sees 340,000 to 355,000 as a more likely scenario.

Tesla representatives did not immediately respond to requests for comments.

Tesla's 5.3% Bond yield for 2025, according to Trace, now stands at 8.9%, well above the average return of a B-rated company. According to Bloomberg intelligence analyst Joel Levington, the bonds have left the broader US high-yield index of Bloomberg Barclays Single B around 500 basis points this year, "said Levington on Monday in a report. According to Trace, the bond price fell below 83 cents on an intraday basis for the first time, making the security the biggest loser on the high-yield market.

Elton Musk, Tesla's Chief Executive Officer, recently emailed the staff, where he and CFO Zachary Kirkhorn will personally review the expenses after an unexpectedly heavy loss in the first quarter. After Musk had to repay $ 920 million in cash in March, another $ 566 million is due in November to turn Tesla into a $ 500 billion company. Market capitalization is currently less than $ 36 billion, followed by General Motors Co. and Ford Motor Co.

If Tesla can not make a profit in the second half of the year, the company may need to spend another $ 1 billion to $ 2 billion Ives said in an interview with Bloomberg Television: "With a code-red situation at Tesla, Musk & Co. is expanding into insurance, roboticaxi and other science fiction projects / projects where the company should instead be a laser -Focused on strengthening the core demand for Model 3 and simplifying the business model and cost structure, "Ives wrote in his report.

(Updates with diagrams after the fourth paragraph.) Gabrielle Coppola, Jonathan Ferro and Molly Smith.

Contacting the reporter of this story: Dana Hull in San Francisco at dhull12@bloomberg.net

Contacting editors responsible for the story: Craig Trudell at ctrudell1 @ bloomberg. net; Young-Sam Cho at ycho2 @ bloom berg.net, Chester Dawson

For more articles of this nature, visit bloomberg.com

© 2019 Bloomberg L.P.


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