Morgan Stanley analyst Adam Jonas, who was once allured by the Tesla story and rooted for the brand, now second-guesses the company’s future in its industry as reports surface of the company’s problems with debt.
In a private call with Wall Street clients made on Wednesday, Adam Jonas rounds off his disappointment with the company’s current situation as he is heard saying over the recording that, “Tesla is not really seen as a growth story. It seems like a credit and restructuring story.”
According to Jonas’ calculations, Tesla will be holding about $13 billion in gross debt, after the second quarter, and $8.4 billion in net debt. This seems to be a problem as company growth has been stunted in the past months as problems in product supply arose.
On Wednesday, May 22, company shares fell 6% after Citi group analysts report a bearish call for the electric automaker for the second time this week. Citi predicts that there would be a 40% chance that Tesla would fall to $36 just a day after Morgan Stanley analysts say that at its worst, company stocks could eventually decline to $10. On Thursday, shares fell by more than 4% during premarket trading.
Indeed, the scenario looks grim as Jonas paints a bleak picture for the company, implying that the ways out towards the company’s success are met with dead ends.
He does not believe that the new Model Y and refreshing existing Models S and X are sufficient to bring the company back to good standing. Nor does he think leasing the company would work as third-party financial partners would not be willing to put their stakes on the company’s lack of information about their cars’ residual value.
Even talks about a company purchase by giants Apple or Amazon are trashed—what with the brands tarnished reputation of cars occasionally catching fire or running over pedestrians?
Feasible solutions may be found in SpaceX, which Tesla CEO Elon Musk has a 54% stake of, to collateralize Tesla. But in the meantime, we have yet to hear from Musk’s decisions for the future.
