Can Elon Musk’s “Unexpected Product” save TSLA stock?
Tesla Motors Inc (NASDAQ:TSLA) stock dropped more than two percent on Friday, and it seems to be out of steam as the market gets flooded with negative news about Tesla Motors. CEO Elon Musk is known to make big announcements at regular intervals, which also impact TSLA stock, and here came another this Sunday.
Elon Musk sent a message on Twitter that a new unexpected Tesla product shall be unveiled on October 17, 2016. In a previous tweet, Elon Musk had announced his plans to unveil a solar roof with an integrated energy storage battery in collaboration with SolarCity Corp (NASDAQ:SCTY).
So it is likely that the new product might be a new version of the company’s energy storage devices. (Source: “Elon Musk will unveil an ‘unexpected’ Tesla product next week,” Recode, October 9, 2016.)
On Sunday, Musk also announced that the company would not need to raise equity or corporate debt in the fourth quarter for the acquisition of SolarCity. Although this may be good news for Tesla stock, there are doubts surrounding this claim. Earlier, the company had stated in its regulatory filing that it could raise money by year end.
Tesla Motors is spending lot of money in the production of “Model 3” and the company also released a proposal last week to double the size of its California plant to increase its production capacity.
TSLA stock has been going downhill after touching an all-time high of about $269.00 in April this year. Further, Goldman Sachs Group Inc (NYSE:GS) had downgraded Tesla stock to “neutral” on account of potential risks in its planned acquisition of SolarCity as well as in its timely delivery of new “Model 3”. (Source: “Goldman Sachs downgrades Tesla due to concerns over SolarCity, Model 3 launch,” CNBC, October 6, 2016.)
Hence, Tesla has a lot to prove to its investors in the coming days apart from releasing new products. The company will post its financial results for the third quarter on October 26, 2016. Although Tesla Motors Inc has few high cash flow generating options and clear competitive advantages against its competitors, what the company needs to do is improve its focus, as well as its finances, to boost investor confidence. If the company can do this, TSLA stock is likely to look up.