Tesla Skids as Wall Street Sees Bittersweet Path Ahead

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Invesing.com – Tesla faces a bittersweet near-term future as its deliveries will likely fall short of the target, but the electric automaker’s cash pile will help it ride out the Covid-19 pandemic, Bernstein said.

“The company’s pain is likely to extend through the second and third quarters as the economic weakness wrought by the coronavirus pandemic could dwarf anything seen during the Great Recession,” Bernstein analyst Toni Sacconaghi said in a note.

Tesla (NASDAQ:TSLA) fell 6%.  

Bernstein forecasts that Tesla will miss its unit sales goal this year, pressuring revenue to fall by fifth.

Others on Wall Street agree. 

“To this point, we now believe (Tesla) hitting the 500,000 unit delivery threshold for 2020 is a virtual impossibility,” Wedbush said, estimating deliveries to within a 400,000 to 425,000 range.

But while many companies are desperate to build up their cash concerns on an expected slowdown in activity amid coronavirus-led recession, Tesla is not one of them as its recent equity raise gives it plenty of room to weather the storm. 

“On the brighter side, Tesla’s cash balance is likely to hit its lowest point of around $6.6 billion in the second quarter, and Tesla only has about $100 million of debt due this year, and is facing a $1.4 billion convertible bonds in March 2021,” Bernstein added.

Tesla is expected to release the first-quarter delivery and production numbers later this week, which will provide investors with an insight into the impact from the coronavirus pandemic, especially in “the all-important China region with Giga 3 front and center,” Wedbush said.

“We believe Tesla, like every other auto manufacturer, is seeing demand softness globally over the last month as consumers remain in a virtual lockdown,” it added.