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What's going on?
Headed for a crash and burn? Electric car manufacturer Tesla has had a pretty rough March, with shares in the company down almost 15% in the last week alone (tweet this). And, according to some, things are only gonna get worse
What does this mean?
Teslas come under scrutiny after one of its Model X SUVs caused a fatal crash while driving on autopilot the second fatality linked to a self-driving Tesla car. Its also (unrelatedly) launched its biggest recall to date, pulling back 123,000 Model S cars because of corrosive bolts in the power steering.
Unfortunately, all this is only worsening Teslas relationship with its investors, who are apparently losing patience with the companys finances and repeatedly missed production targets. Meanwhile, Moodys, a major credit ratings agency (just like we get credit scores, these agencies give them out for companies), kicked the companys credit rating down a gear last Thursday, given its continued delays in production and reliance on debt financing.
Why should I care?
For markets: Investors are turning up their noses to Tesla more and more.
The traded value of Teslas debt (which investors can buy and sell like a stock) has steadily declined in March, as investors seem to be losing a degree of faith in the company and worry about its big debt load. Investors are also increasingly betting against (a.k.a shorting) Teslas still relatively high-valued stock as they think its price will continue to drop.
The bigger picture: Self-driving cars, and companies that aim to profit from their development, are hitting some speed bumps.
Authorized testing of self-driving cars on public roads was suspended across various jurisdictions after an Uber autonomous vehicle was involved in a fatal crash. Last weeks news from Tesla piled on the pressure. Partly as a result, the rules regarding autonomous vehicle testing and development may become more stringent in the near future. Lots of companies involved in the autonomous driving industry, including chipmakers like Nvidia as well as manufacturers like Tesla, have seen their stock prices sell off significantly.
Originally posted as part of the Finimize daily email.
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