Musk later introduced the Model Y midsize SUV, but gave few details. Investors were nonplussed. Then came a conference call to announce fully self-driving cars by sometime next year, an announcement widely criticized by experts as unrealistic. The stock slump continued. With sales down, Tesla posted a larger-than-expected $702 million first-quarter loss in April, and Musk warned it wouldn't be profitable in the second quarter either.
In May, Tesla sold stock and notes that yielded $2.3 billion, increasing debt. Along the way, the SEC asked a judge to find Musk in contempt for tweets about vehicle production, a spat that was later settled. Also throw in reports of a leaked email last week from Musk to employees saying at the current cash burn rate, Tesla would go broke in 10 months.
WHAT HAPPENS NEXT?
It all depends on whether Tesla can produce enough cars at its Fremont, California, factory and whether people keep buying them. Musk's memo from Wednesday said the company has 50,000 net new orders this quarter and it could pass record deliveries of more than 90,000 in the fourth quarter of last year. That could generate enough cash to reverse the company's fortunes. But many analysts are skeptical. Morgan Stanley's Jonas didn't think sales would be that strong.
"We see shares continuing to trade lower on a lack of near-term catalysts and likely cut to vehicle sales guidance," CFRA analyst Garrett Nelson wrote in a note to investors Thursday. He cut his one-year stock price target $50 to $150.
Senior Analyst Jessica Caldwell of Edmunds, which provides content to The Associated Press, said Tesla has an uphill climb.
"There doesn't appear to be anything in the (product) pipeline that is going to save them," she said. "Now Tesla seems to be losing the confidence of its biggest cheerleader, Wall Street."
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