Elon Musk, the Chief Executive of Tesla Inc., hinted on Wednesday that a capital raise for the recently distressed company could be coming soon. If so, this would be welcome news for a company that suffered $700 million in losses in the first quarter. Plus, Musk and the company promised they’d rebound with a profit in the third quarter. It’s a daringly bold prediction given the state of things.
Officials at Tesla have plans to fix logistics concerns with global vehicle deliveries after suffering a tough stretch of months. This period was also plagued with staff layoffs and a very ugly dispute between Musk and U.S. financial regulators. Currently, shares of the stock are down around 22 percent. Moreover, they remained flat after the news of the possible financial influx.
Musk is pointedly trying to convince investors that the hunger for the Model 3, a sedan which is meant to lead Tesla to profit, is very strong. He also is emphasizing the company’s ability to deliver the vehicle efficiently around the globe. Previously, there was much concern about Tesla’s cash situation.
Plus, Musk walked back one of his typically bold pronouncements, when he said that his company’s Shanghai factory would produce 3,000 Model 3’s per week by years end. Now, Musk claims that 1 to 2,000 per week is more likely.
Outside analysts had recently prognosticated that Tesla would need to seek money to fund its expansion. This includes the Shanghai factory which is still being built. They also predicted the company would need additional money for the upcoming Model Y SUV as well as other projects. Musk is now admitting that yes it’s the right time for an infusion of cash.
The Silver Lining
The good news is the company reiterated its claim that it will produce 360,000 to 400,000 vehicles in 2019. They even say this number could be higher if the Shanghai facility is operational by the fourth quarter. Furthermore, Musk maintains the company will return to profit in the 3rd quarter, while also reassuring investors the 2nd quarter losses won’t be near those from the first.
So, what do you all think? Should we continue to bet on the genius of Elon Musk?