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Tesla Shareholders Cheer Musk's Employee Memo To Produce More, Spend Less

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Tesla Shareholders Cheer Musk's Employee Memo To Produce More, Spend Less
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Tesla Motors Inc (NASDAQ: TSLA) CEO Elon Musk wants all employees to take initiatives to cut costs whenever possible during a "critical" quarter.

In an e-mail to Tesla's employees which was obtained by Bloomberg, Musk said the third quarter represents the last chance to show investors that the company be "at least slightly positive cash flow and profitable" before the Model 3 sedan reaches full production.

The email appears to have jolted life back into Tesla's stock. Shares rose 2.55 percent on Tuesday and were higher by more than 1 percent early Wednesday morning.

Musk noted that in the fourth quarter, spending for the Model 3 sedan will "force" the company "into a negative position" until the Model 3 reaches full production - an event that isn't expected to happen until late 2017. The company also needs to raise additional cash in the fourth quarter to finalize the Model 3 vehicle factory as well as the Gigafactory.

"We are on the razor's edge of achieving a good Q3, but it requires building and delivering every car we possibly can, while simultaneously trimming any cost that isn't critical, at least for the next 4.5 weeks," Musk wrote.

Musk added that it would be "awesome to throw a pie in the face of all the naysayers on Wall Street who keep insisting that Tesla will always be a money-loser!"

Related Link: Should Tesla Shareholders Be Worried About The SpaceX Explosion?

Street Remains Mixed, Investors Were Buyers

However, convincing Wall Street's harshest critics isn't an easy task. For instance, Colin Langan of UBS has a $160 price target on Tesla's stock and told Bloomberg there remains "a lot of uncertainty" in the company given its "ranging views of production, profitability and cash needs."

Langan is "cautious" on Tesla's ability to achieve its 2018 and 2020 production targets, not to mention the profitability profile of the Model 3 sedan given its "still-high battery costs."

On the other hand, Charlie Anderson of Dougherty's $500 price target is the highest estimate on the Street. He told Bloomberg his expectations are high for Tesla as the company will "become as large as BMW is today by 2025" in terms of vehicle volumes.

Anderson also said Tesla hasn't only the "technology lead" but a "brand" image that will allow it to "take considerable market share."

Posted-In: Elon MuskAnalyst Color Long Ideas Media Trading Ideas Best of Benzinga

 

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