Tesla Inc. investors aren’t laughing after Elon Musk’s April Fools’ Day joke that the electric-car maker went bankrupt, as months of problems making the mission-critical Model 3 sedan risk compromising the company’s cash reserves.
After the steepest monthly drop in more than seven years, Tesla shares fell as much as 8.1 percent on Monday, while unsecured bonds the company issued in August traded near record intraday lows. Early this week, analysts widely expect the company to report that Model 3 production trailed its projection of 2,500 units during the last week of March.
The Model 3 woes are a greater risk to Tesla than the fatal accident involving a Model X driver using Autopilot, a related U.S. regulator’s investigation and a separate Model S recall, all of which have weighed on investor sentiment since last week. Analysts at Jefferies Group LLC and Moody’s Investor Service estimate that Tesla may need to raise $2 billion to $3 billion in capital. That’s in large part because the slow build of Model 3 has limited the company’s return on investments made to build its first mass-market car.
“What seemed to be a short-term issue has now been going on for more than three quarters,” Philippe Houchois, an analyst at Jefferies Group LLC, said Monday on Bloomberg Television. “Management will need to address a proper funding plan” and “reassure investors that they’ve got the funds to even potentially announce some further delay in the ability to ramp the production.”
Musk told employees in an email early Monday morning that the electric-car maker may exceed a weekly production rate of 2,000 Model 3 sedans, according to the blog Jalopnik.
“If things go as planned today, we will comfortably exceed that number over a seven day period!” Musk wrote in the email sent at 3:01 a.m. Monday California time, Jalopnik said. A Tesla spokesman didn’t immediately respond to requests for comment on the report.
Some analysts were speculating Tesla’s stock may rally if production exceeds Wall Street’s lowered expectations. The shares pared declines after the Jalopnik report and traded down 5 percent to $252.80 as of 2:43 p.m. in New York, amid a broad equity market selloff.
Tesla’s 5.3 percent bonds due 2025 were trading at 86.9 cents on the dollar at 2:38 p.m. in New York on Monday, Trace bond price data show.
Well-Paid Jokester
Shareholders voted in favor of a pay package valued at $2.6 billion for Musk last month. The 46-year-old billionaire has seen his fortune tumble since then, with Tesla shares plunging 22 percent in March, their worst month since December 2010.
That didn’t stop him from posting some playful tweets on Sunday.