Elon Musk

Sell Tesla shares because carmaker will need to raise capital in the fourth quarter or earlier

One Wall Street agency disagrees with Elon Musk’s view on Tesla’s funding necessities.

said in a statement it didn’t require an extra capital raise this yr other than credit score strains. Later that month Elon Musk additionally stated on social media the firm had “no need to raise money.”

“The top concern from investors is not surprisingly the Model 3 production ramp. While this is critical, we believe there is not enough focus … on liquidity, quality, and profitability,” analyst Colin Langan stated in a word to shoppers Wednesday. “To fund both its capex plans for the year ($3bn) and pay off [its] debt maturities, as well as keep its desired cash cushion of $1bn, we believe the company will have to raise capital by Q4 2018 or earlier.”

Tesla shares fell zero.eight % Thursday.

Langan reiterated his $195 value goal for Tesla shares, representing 33 % draw back to Wednesday’s shut.

The analyst predicts the firm will burn about $1.6 billion of money in the first half of 2018 and finish its second quarter with $1.eight billion of money. He famous the firm has roughly $500 million of debt due this yr and $750 million of Gigafactory-related liabilities, which he estimates will cut back its money steadiness to below $1 billion later this yr.

“The market should not ignore fundamental headwinds that persist with regard to TSLA’s Model 3 profitability, stationary storage, and solar,” he stated. “Moreover, we see additional capital raises as likely, particularly with any further Model 3 delays.”

Tesla didn’t instantly reply to a request for remark.

— CNBC’s Michael Bloom contributed to this story.

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