Tesla Inc. (NASDAQ:TSLA) was down 0.53% in early afternoon trading on April 17. The electric car manufacturer recently announced a temporary halt in the production of its Model 3 sedan. The production of the Model 3, an affordable alternative seen as critical to Tesla’s profitability going forward, has been a sticking point for critics.
Founder and CEO Elon Musk poked fun at the company’s production misfortunes on Twitter in early April, writing that Tesla was “bankrupt”. Shares of Tesla are down 6.4% in 2018 so far and have dropped 4.2% year over year. Tesla has attracted some ominous bearish calls in recent weeks, with one hedge fund declaring that the company will go bankrupt “within months”. In late March Moody’s downgraded Tesla’s credit rating to B3 from B2.
Tesla has said that the production pause for the Model 3 is to improve automation and address bottlenecks. Elon Musk said in a tweet on Friday that “excessive automation” had been a drag on production and that “humans are underrated”. In the first quarter Model 3 production was unable to reach its target of 2,500 a week. Musk has pledged that Tesla will be able to reach production of 5,000 a week by the second quarter, but analysts remain skeptical.
The company still has an opportunity to bounce back from these setbacks, but investors should exercise extreme caution at its current price. Tesla is entering a crucial stretch that could determine its future.
