Investors across the world have long looked upon Elon Musk’s Tesla with caution, given the peculiar nature of the company’s mission to reinvent how drivers everywhere look at their automobiles. Tesla is one of the few companies that’s consistently kept faith in its electric car strategy, and has made a series of interesting business decisions that have sometimes sent investors running, while other times lured them in en masse. Recently, however, investors are starting to give the company the cold shoulder, particularly since fears are growing that it will continue to fail to meet production expectations and a possible share sale has been mooted.
Here are the basic facts about Tesla’s recent stock plunge, and what the future might hold for Elon Musk’s ambitious company.
Tesla has had a rough week
It hasn’t been a great month for tech companies; every major staple of Silicon Valley, from Facebook to Tesla (NASDAQ: TSLA), appears to be suffering from PR disasters or data breaches that have sent stocks plunging. Tesla’s most recent fears were compounded when the company’s shares dropped by more than 8 percent following an announcement that federal authorities would be investigating a deadly crash in California that may have been caused by the company’s autopilot system. Public concern surrounding the company’s usage of AI to create a viable autopilot program is only one of the issues Tesla’s executives have to deal with right now, too; production failures have also consistently haunted the auto manufacturer for some time, and some financial backers are beginning to get worried.
For instance, an announcement earlier this year that Tesla would be pushing back its production target yet again sent shares stumbling, and ignited broad fears across the market that the company would continue to fail to meet production expectations. While Tesla claims to have made serious inroads when it comes to leaping over the production hurdles it’s currently encountering, Wall Street professionals are more interested in what the company does than they are in what it says.
The world’s leading electric car maker may continuously draw positive press from local SEO services because of its ambitious, environmentally-friendly mission, not to mention the eccentricities of its CEO, but that doesn’t mean financial backers are going to remain patient forever. Tesla has literally thousands of customers already lined up to buy its Model 3 vehicle, which commands a starting price of some $35,000, but the company has thus far appeared totally incapable of actually meeting production targets to meet the growing demand for its innovative vehicles.
Tesla is also facing down a worrying amount of debt, as the company has some $230 million in bonds due by this coming November alone. If the ambitious car company doesn’t make some serious course adjustments soon, a future where the roads are dominated by electric vehicles may never come into effect.
Tesla needs to climb out of its production hole
While a brilliant analysis by Bloomberg has indicated that Tesla is probably producing more than 1,000 cars a week, the company is far off course from where it should be. For instance, Tesla originally set a production target of 2,500 cars per week for itself by the end of the third quarter, far from the meager thousand or so it’s currently churning out every seven days. Another significant production miss could cause its stocks to plunge ever further, which could prove disastrous to the company’s ability to pay back some of its existing debts.
Still, not everyone has given up on Elon Musk’s ambitious car project; after all, Tesla has commanded recent technologies in new and exciting ways, and continues to draw the fervent support of tech-savvy investors everywhere thanks to its impressive leveraging of things like big data analytics. Take a look at how Tesla is taking advantage of some 1.3 billion miles worth of data its collecting from its drivers, for instance, and you’ll come to understand that the company still has a few tricks up its sleeve that warrant it a second chance on the market.
Still, tapping into the modern innovations that are drawing everyone’s attention isn’t enough for Tesla in the long-run; to remain viable well into the future, the company desperately needs to start hitting production targets, lest financial backers decide to abandon it entirely to the wolves. Future investigations surrounding the development of its autonomous car program could stifle its stock growth, too, meaning the company’s expertise when it comes to the latest tech trends can be just as much of a burden as it can be a blessing. Forget profits and losses; the only thing that should be concerning would-be Tesla backers right now is the fate of the company’s production lines, which thus far have proven insufficient to meet the massive demand for Tesla’s cars. If Elon Musk’s brainchild can start churning out Model 3s in large numbers, expect Tesla’s stocks to skyrocket upwards – if not, however, they’ll likely be doomed to mediocrity.