Tesla’s Slow Stock Race

Everybody knows Tesla as the sleek, fast electric car but what people don’t know is that Tesla is in the middle of a financial crisis. People don’t realize that Tesla is having financial problems because of their high stock price of $333.97. This values Tesla at 52 billion dollars while Ford motors is valued at 48 billion dollars. Many see this evaluation of Tesla as reasonable since it is the most popular electric car yet many investors see the evaluation to be overpriced since they don’t have the sales to support this evaluation. Currently to date, Tesla motors has sold 300 thousand electric cars over the company’s entire lifespan. In 2017, Ford motors sold 6.6 million cars. Investors still price Tesla higher than Ford even though they have sold a small fraction of the number of cars Ford sells. The small number of sales introduces a huge problem because of Tesla’s extensive spending. Right now, Tesla is spending a lot more than they are making and they are losing 480 million dollars a month. Losing money is very normal for companies that are just starting out because companies want to scale as fast as possible and this involves spending more money than they are making. So, to evaluate a new company investors look at projected sales and growth. As of now, Tesla’s evaluation is held by the introduction of their newest car the Tesla Model 3. Over 400 thousand people have placed reservations on this car by depositing one thousand dollars, just to get a spot to have a car that will come two years later. Unfortunately, producing this new car has been no easy task for Tesla. The company has failed to meet all production goals they set for themselves in producing the Model 3. By the end of 2017, Tesla was supposed to be producing 5,000 a week; they have only produced about 1,500 a week. About a couple months ago, Tesla Ceo, Elon Musk, admitted they were in “production hell”. This proves to be very problematic for the company because if they dont start producing more Model 3s, then investors will likely be uninclined to reinvesting in the company. This is because Tesla simply continually fails to meet goals they set themselves and Tesla burns even more money to keep scaling. If Tesla doesn’t receive a certain amount of funding from investors, their stock will likely take a massive plunge. If their stock takes a massive plunge, they will need to be bought out by another company. It isn’t unlikely that Ceo, Elon Musk, will let Tesla be bought out by another company should they fail to get investors. In 2009, Elon Musk tried to sell Tesla to Google and Google backed out of the deal; I bet they are kicking themselves now because Tesla has grown from 500 million in 2009 to 52 billion.