Tesla Inc. (NASDAQ: TSLA) shares fell by over 6 percent on Monday ahead of the company’s quarterly vehicle production numbers, which will be heavily focused around Model 3.
Tesla’s downfall started with a fatal accident, which resulted in a probe. Then, on April Fool’s, Tesla CEO Elon Musk tweeted out the company has gone bankrupt as a joke, which was not a joke to investors due to the matter that the company was on track for bankruptcy within the next four to five months.
“Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt. So bankrupt, you can't believe it.” tweeted Musk.
The bankruptcy joke was apparently a response to Tesla bear analyst John Thompson of Vilas Capital Management, who predicted Tesla to go bankrupt within the next four months if operations did not turnaround, according to Marketwatch.
Shortly after the tweet, Wall Street analysts began to downgrade the company ahead of its quarterly production report.
“We like the set-up headed into Q1 deliveries as we believe sentiment is overly negative, and think Tesla may be able to exceed lower expectations,” Baird analyst Ben Kallo wrote in a note.
Moody’s downgraded Tesla last week saying that the company is on track to miss production targets and liquidity pressures.
“We consider a small possibility of Tesla releasing supportive data this week but mainly high probability that management and the Board will take more drastic action on guidance and funding to restore credibility,” Jefferies analyst Philippe Houchois wrote in a client note.
Houchois told clients last year to avoid any electric vehicle manufacturer share over the next few years. He stated that manufacturers are on track to face losses and report weak financial performances.
Deutsche Bank analysts downgraded Tesla saying that the company would miss its first quarterly production goals for the Model S.
Tesla bull analyst, Romit Shah of Instinet lowered his price target for Tesla shares from $500 to $420 over production concerns.
In the fourth quarter, Tesla delivered nearly 30,000 vehicles, but Model 3 deployments increased from 220 in the third quarter to 1,542.
Tesla forecasted that it will begin to generate positive quarterly operating income in 2018, driven by both the Model 3 and energy storage products. The company forecasted a total of 100,000 Model S and Model X deliveries in the year.