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Trading  | April 2, 2018

One day after Elon Musk amused his 20 million twitter followers with a Tesla bankruptcy April Fool’s joke…

… this morning shareholders of Tesla are hardly laughing, with Tesla stock tumbling as much as 5%, down to $254, the lowest level since March 2017, and down 15% YTD.

And while we doubt that Musk’s “joke” prompted the selloff – even if it does cut too close to comfort for the company that burned $3.5 billion in cash last year…

… Tesla has seen a spate of negative news over the past few days, including a rating agency downgrade of the company’s bonds deep into junk status, a recall of all Model S cars built before April 2016, a fatal accident last month involving the company’s driver-assistance system and a growing consensus that the carmaker’s first-quarter deliveries may fall below expectations.

As a reminder, last week, Moody’s downgraded Tesla over concerns about Model S production and a warning it may need another $2 billion in liquidity sending its bonds tumbling, with the yield surpassing that of Ukraine.

Tesla also recalled 123,000 Model S vehicles due to problems with the power-steering component, saying it saw “excessive corrosion” in the power-steering of affected cars.

As we reported overnight, Tesla also admitted that the car involved in a fatal crash in California last week was operating on Autopilot mode, although it claimed that the autopilot was not at fault. This in turn prompted a furious rebuke from the NTSB, which was angry that Tesla was clouding the conclusion by presupposing that the autopilot had no guilt:

“The NTSB is looking into all aspects of this crash including the driver’s previous concerns about the autopilot. We will work to determine the probable cause of the crash and our next update of information about our investigation will likely be when we publish a preliminary report, which generally occurs within a few weeks of completion of field work.”

Still, despite the recent slump in Tesla stock, its market cap remains surprisingly high at $45 billion (as of Friday’s close). John Thompson, head of Vilas Capital Management, summarized it best: “As a reality check, Tesla is worth twice as much as Ford [estimate of the enterprise value of both companies], yet Ford made six million cars last year at a $7.6 billion profit, while Tesla made 100,000 cars at a $2 billion loss.”

TSLA, which last week urged its workers to work extra hard on ramping up Model 3 output, and “prove the haters wrong“, is expected to report Q1 delivery numbers early this week; they are expected to be a disaster.

Even Goldman agreed:

Needless to say, Thompson believes that Tesla is months away from collapse. A few more jokes from Musk and the company’s bankruptcy should come even faster.

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