Tesla Model 3 release would make headaches disappear: analyst
There’s an easy solution to Tesla CEO Elon Musk’s cash-burning problem, according to analyst Gene Munster: He needs to end the Model 3 production problems that have plagued the Silicon Valley automaker.
“Once there’s more Model 3s out, I think that's really going to turn the light on that this is a pivotal moment in automotive,” Munster, managing partner at Loup Ventures, told FOX Business’ Stuart Varney on Friday. “And people are going to want to get behind that story.”
Tesla posted better-than-expected first-quarter earnings and stuck with its forecast for the production of the Model 3, but the rapid buildup forced the company to spend more cash than analysts had expected.
The electric-car maker affirmed plans to hit a weekly production rate of 5,000 Model 3 sedans by the end of the second quarter and continues to forecast profits and positive cash flow in the third and fourth quarters. Yet some investors are concerned that the company will need to raise additional capital by the end of the year.
When asked during a sometimes-contentious conference call with analysts Wednesday whether he would want to raise additional cash even if Tesla doesn’t need it, he insisted he wouldn’t do so. “No,” he said. “I specifically don’t want to.”
But if the billionaire changes his mind, Munster said, he won’t have any problem acquiring the necessary funds once investors see that the Model 3 production issues have been resolved.
“As soon as the Model 3 gets out to the masses, you’re going to see the public view of this investor's view of this story is going to turn more positive,” he said.