Tesla bonds, stock fall as Moody's downgrades the company

Alicia Cross
March 29, 2018

The stock has a consensus rating of "Hold" and a consensus target price of $322.64.

A federal probe into the incident, in which a woman was killed whilst walking her bike across the street, is now underway and Arizona officials said Monday that Uber would be banned from future tests until the investigation is concluded. The LA Times revealed that they are now examining an incident from January this year involving a Tesla vehicle and its autonomous driving system. The Tesla's lithium batteries caught fire and emergency officials consulted company engineers before determining how to extinguish the battery fire and move the vehicle safely.

The company said it is working with authorities to recover the logs from the computer inside the vehicle to try to gain a better understanding of what happened.

Tesla Motors Inc (NASDAQ:TSLA)'s stock on Tuesday traded at beginning with a price of $304.00 and when day-trade ended the stock finally plunged -8.22% to reach at $279.18.

Tesla is also under scrutiny after the fatal crash of a Model X in California on Friday.

A missing or damaged safety shield on the end of a California freeway barrier worsened the impact of a crash involving a Tesla SUV that killed a man last week, the electric auto maker said on its website.

The collision caused extensive damage partly because a safety barrier meant to reduce the impact into a concrete lane divider had been removed or crushed in a prior accident without being replaced, Tesla said.

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Tesla said, in a blog post on its website, that it does not "yet know what happened in the moments leading up to the accident", adding that it does not know the cause, either. During the same period in the previous year, the company earned ($0.69) EPS. sell-side analysts predict that Tesla will post -15.15 earnings per share for the current fiscal year.

The National Transportation Safety Board said on Twitter that it's not clear whether the Tesla Model X was operating on its Autopilot program at the time of the crash.

Tesla, one of founder Elon Musk's contributions to the world of technology and engineering, has been viewed by many as an overly-ambitious project that is shrouded in a ceaseless stream of hype. "It's going to be harder for them to raise money".

Tesla's debt was downgraded on Tuesday by Moody's Investors Service, which cited a "significant shortfall" in production of its Model 3 electric vehicle. While the company has said it expects to end the quarter making 2,500 Model 3s per week, analysts are skeptical.

Since the end of February, the median analyst price target for Tesla has dipped by $10 to $356, about 37 percent higher than Wednesday's price, according to Thomson Reuters data.

The downgrade comes as Tesla has been grappling with "production hell" for its Model 3 vehicle. Autopilot in Tesla models handles some driving tasks.

"This is the most negative sentiment I've seen in a while", Ben Kallo, an analyst at Baird, said Tuesday. While investors were doubtful that his auto startup could even make an electric vehicle, Musk succeeded in building a company that now competes against some of the industry's most powerful, long-standing leaders, with its Model S sedan receiving the highest quality ratings.

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