Tags: marc faber | tesla | share price | stock

Marc Faber: Tesla Stock Price Will Crash to Zero

Marc Faber: Tesla Stock Price Will Crash to Zero

Tesla Chief Executive Officer Elon Musk (Getty Images/Jerry Lampen)

By    |   Thursday, 11 August 2016 06:16 AM


Marc Faber, editor of the Gloom, Boom & Doom Report, doesn’t think much of Tesla Motors Inc.’s stock.

Literally. The ever-bearish pundit, known as “Dr. Doom,” recently told CNBC he thinks the share price will vanish into nothing.

"I think Tesla is a company that is likely to go to zero eventually," Faber told CNBC. Tesla stock recently traded at around $225.60.

The reason? Well, to be blunt – he doesn’t think Eton Musk’s electric-vehicle maker does its job very well.

"What they produce can be produced by Mercedes, BMW, Toyota, Nissan. Anybody in the world can make it eventually, at much lower cost and probably much more efficiently," Faber told CNBC.

"The market for Toyota and these large automobile companies is simply not big enough, but the moment it becomes bigger, they'll move into the field and then Tesla will have a lot of competition."

Faber recommended that "if you are an investor with a lot of nerves and you sleep well at night anyway, then you could hedge the portfolio somewhat by selling short some stocks that are overvalued and are likely to go down" — providing Tesla as an example.

Tesla recently reassured investors it can ship roughly 50,000 cars in this year’s second half and 500,000 in 2018, easing the sting of a second-quarter loss that was wider than analysts estimated.

The loss, excluding some items, was $1.06 a share, the company said in a letter to investors posted on its website last week. The average estimate in a Bloomberg survey of 17 analysts was for a loss of 60 cents a share.

Investors were comforted by Chief Executive Officer Elon Musk’s confidence that the company will hit its sales targets and that the new Model 3, Tesla’s $35,000 sedan, will go on sale next year. The 50,000 forecast for second-half deliveries exceeded the average of 48,300 estimated by three analysts. Just as importantly, Tesla said it remains committed to producing 500,000 vehicles in 2018.

“The key is that Tesla reiterated 500,000 vehicles in 2018,” Charlie Anderson, an analyst at Dougherty & Co., told Bloomberg News. “They spent more money, which is why EPS was down. But the spending was on R&D. This is a company that is continuing to invest in the future.”

Tesla has had an intense past few months as it moves toward a $2.6 billion acquisition of solar-panel installer SolarCity Corp. U.S. safety regulators are investigating a fatal Florida crash in May that involved Tesla’s Autopilot driver-assistance features. And last week, it celebrated the official opening of its Gigafactory near Reno, Nevada, where battery-cell production is slated to begin in the fourth quarter.


In a new sign of pressure on the electric-vehicle maker, the company itself last week disclosed $1.1 billion in third-quarter cash requirements in payments and planned expenditures, about a third of the cash it had on hand, Reuters reported.

The company is finishing construction of a massive battery factory in Nevada, the Gigafactory, and ramping up for production next year of a mass market sedan, the Model 3. That has raised questions about whether the company will need to raise new cash to reach its goals.

It said in the filing that it had $3.25 billion in principal sources of liquidity as of June 30, 2016, including $1.7 billion from a public offering in May and a $678 million credit line.

The filing also said that in July it had repaid that $678 million credit line and that it intended to repay principle on $411 million of 2018 convertible notes in the third quarter and could spend more on the securities.

"During the third quarter, we will be using substantial amounts of cash in connection with conversions of our 2018 Notes and we could pursue other actions to reduce our outstanding balance of convertible notes, which could require further outlays of cash," Tesla wrote in the filing with the U.S. Securities and Exchange Commission.

If the two third-quarter payments are subtracted from the mid-year cash balance, Tesla would have $2.1 billion left over. The company on Wednesday told analysts it planned $1.75 million in the second half of the year on capital expenditures. 


(Newsmax wire services contributed to this report).

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Marc Faber, editor of the Gloom, Boom Doom Report, doesn't think much of Tesla Motors Inc.'s stock.Literally. The ever-bearish pundit, known as "Dr. Doom," recently told CNBC he thinks the share price will vanish into nothing.
marc faber, tesla, share price, stock
Thursday, 11 August 2016 06:16 AM
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