Tesla shares sink on reports carmaker is running short on cash
The Wall Street Journal sites a Tesla memo, in which the carmaker asked its major supplier to refund some money Tesla had paid earlier. Tesla characterized it as a re-investment to continue the long-term growth between both players.
Tesla was trading below $300 per share at the opening bell on Wall Street, losing over $2.3 billion off its market capitalization. The company stock was down 5 percent on Monday and is trading 10 percent lower on the year.
Tesla has never reported a profit in its 15-year history. The company reported a net loss of $2.24 billion in 2017, a significant increase on the $773 million net loss it reported in 2016. The electric carmaker has been burning through cash as it speeds up production of its Model 3 sedan. Tesla held about $3.2 billion in cash after the first three months of the year, having spent about $1 billion through March.
“This is one more sign that money is getting shorter and shorter and I am sure that Tesla needs fresh money at the latest next year,” said Frank Schwope, an analyst with NORD/LB.
Tesla expects to be profitable in the third and fourth quarters of the year after posting a loss of $709.6 million in its first quarter. In June, Tesla announced a 1,000 job cuts to slash spending.
Despite of years of unprofitability, Tesla's market capitalization is over $50 billion. It trails GM's market cap of $55 billion, but is well above profitable automakers such as Ford, which has a market cap of just $18 billion.
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