Tesla lost more than $5 billion and the odds are not looking good for the next week

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Since last Wednesday, Shares of the company have dropped by almost 20 percent which sent the electric automaker’s market cap down by more than $5 billion from $53.47 billion to $48 billion the next day. Short sellers are more than $1.9 billion in less than a month.

Last week’s fiery crash of the Tesla Model X on a California freeway began that the stock’s decline. The NTSB stated this week its was investigation the death, which put further pressure on the stock.

This week, things only got worse as credit rating agency Moody’s on Wednesday downgraded Tesla’s rating one notch to B3, citing a “significant shortfall” in model 3 production.

The company has historically struggled to meet delivery expectations. Tesla initially promised the production of 20,000 Model 3 vehicles per month by the month of December 2017, but only delivered 1,550 in the entire fourth quarter of 2017.

Tesla now states that it will build 2,500 Model 3 vehicles per week by the week ended of the first quarter, and hit 5,000 per week by the end of the second quarter.

“We see the slow ramp and cash burn putting pressure on the stock given the debt due and EV competition coming this year and next,” Cowen analyst Jeff Osborne said in a note to clients this week.

The firm expects Tesla to report deliveries of 7,500 for the Model 3 next week. Osborne has a bearish $200 price target for the stock which is 20% below where shares were trading Thursday.


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