Photo by Afif Kusuma on Unsplash

Will Tesla Go Bankrupt? Stock Continues to Fall

I guess investors are finally starting to see what Telsa is, a failed company. Since the end of last year, Tesla’s stock has been declining and going from its all-time highs of $365 a share down to $189 a share in just six months. So far, 2019 has been a lousy year for Tesla, from missing earnings expectations, low sales, malfunctioning autopilot, random car explosions, to Elon’s troublesome tweets. The company has been operating since 2003 and has yet to make a profit from operations. Perhaps investors are finally waking up and questioning whether or not will Tesla go bankrupt?

According to Morgan Stanley, one of Tesla’s most prominent bullish investment firm, Tesla’s stock could fall to $10 a share, due to the company going too big. The Morgan analyst is worried that Tesla’s expansion, which facilitated by selling bonds, may come back to haunt them. The company has been selling bonds in the hopes to expand its business. However, things are not looking good as Tesla’s yet to make a profit.

Tesla Inc. shares slid further on Tuesday after analysts at Morgan Stanley said their worst-case scenario for the stock is $10, mostly on concerns about faltering demand and worries that the Silicon Valley car maker might have grown “too big.”

– Adam Jonas Morgan Stanley Analyst

Tesla shares have lost 29% in the past 12 months, and 40% so far this year. That contrasts with gains of 5% and 14% for the S&P 500 index SPX, +0.14%  in the same periods.

– MarketWatch

Will Tesla Go Bankrupt?

So will Tesla go bankrupt? I believed so. Tesla is one of those company’s that has a business model that is only sustainable through low-interest rates. If it weren’t cheap money for Tesla to borrow money, they wouldn’t be around today. The same could be said for many companies, such as Twitter, Pinterest, to even Amazon. However, Amazon at least makes money. Furthermore, I do not think Amazon would be as big as it is now if it wasn’t for the low rates.

The bankruptcy prospects for Tesla are even worse than the company’s I mentioned. Tesla’s cash flows have been negative each year. Each year it has to borrows a substantial amount of money only to see little of that money is left by the end of the business year.

Also, It gets worse as Tesla’s liabilities continue to grow more and more. Even though the company’s growth sales have gone up, at some point, the debt and the lack of cash flows will stagnate the sales growth. It’s literally just a ticking time bomb for Tesla. Morgan Stanley’s $10 a share was too optimistic, as Tesla will go bankrupt in the future. It could be this year or ten years from now. The future looks bleak for Tesla as the chickens are showing signs of coming home to roost.

Telsa’s Cash Flow Statement
Tesla’s Liabilities
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