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Elon Musk NTb 341245 - Tesla Stock Crumbles to 30-Month Low as Elon Musk Turns Desperate

Tesla Stock Crumbles to 30-Month Low as Elon Musk Turns Desperate

Tesla Stock Crumbles to 30-Month Low as Elon Musk Turns Desperate

By CCN: Tesla stock flew higher when Elon Musk had announced that the electric vehicle maker will raise more than $2 billion in capital through stock offerings to finance ambitious initiatives such as robotaxis, but he is now singing a different tune.

Musk shows desperation as Tesla stock moves toward new lows

In an email to employees (obtained by CNBC), Musk admitted that Tesla is in danger of running out of money in the next 10 months. He wrote:

It is important to bear in mind that we lost $700 million in the first quarter this year, which is over $200 million per month. Investors nonetheless were supportive of our efforts and agreed to give us $2.4 billion (our net proceeds) to show that we can be financially sustainable.

That is a lot of money, but actually only gives us approximately ten months at the first-quarter burn rate to achieve breakeven.

He added:

[G]oing forward, all expenses of any kind anywhere in the world, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account must be reviewed, confirmed as critical and the top of every page of outgoing payments signed by our CFO.

I will personally review and sign every 10th page.

The email has scared the living daylights out of those holding Tesla stock, which is now trading close to 30-month lows.

tslastock 4 - Tesla Stock Crumbles to 30-Month Low as Elon Musk Turns Desperate

Tesla stock is nearing 30-month lows as investors fear that the Elon Musk-led company could run out of cash | Source: Yahoo! Finance

Investors have been quick to press the panic button and dump Tesla stock as they probably fear that the EV maker is now racing toward bankruptcy. Analysts have also turned against Tesla, with Evercore ISI predicting that the stock could fall to $200 as the company’s sales growth is under threat thanks to several reasons ranging from logistics problems to a booming pre-owned car market.

The only way Musk believes that Tesla can get out of this swamp is by cutting costs. As a result, the billionaire CEO will “personally review and sign every 10th page” of the company’s bank statement. What’s more, Tesla’s CFO will sign every page of the bank statement after reviewing expenses on “parts, salary, travel expenses, rent.”

In effect, Elon Musk has read out the riot act to ensure that there is no wasteful spending as he tries to keep Tesla afloat.

The naysayers are here

According to a CCN poll, 51% of the respondents believe that Tesla is doomed.

TESLApoll - Tesla Stock Crumbles to 30-Month Low as Elon Musk Turns Desperate

A poll of CCN readers tells us that Tesla doesn’t have a bright future | Source: CCN

That’s not surprising as the wheels have been coming off Tesla despite Musk’s best efforts to pump up the stock. Demand for the company’s cars seems to be on the wane as it missed Q1 deliveries by a huge margin.

The fact that Tesla’s cheapest offering – the Model 3 – is taking a big sales hit is proof that the company has lost its mojo. The Model 3 was critical to Tesla’s growth as it would have made its cars more accessible given its relatively affordable price point, but buyers seem to be shunning it.

Model 3 sales had reportedly plunged 74% in January this year as compared to the prior month, indicating that the rot is setting in. Tesla conveniently blamed logistics problems for the massive Q1 miss, before Musk tried to enchant investors and pump the stock with the promise of a million robotaxis by next year.

But Elon Musk is now in a desperate situation and is calling for desperate measures to cut costs. Because if Tesla’s sales fail to lift off and it continues to burn money like it is right now, the company could go bust as 28% of the respondents to our poll think.

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