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Tesla Stock Crushed After CEO Elon Musk Claims Robot Died

Elon Musk (Scott Olson / Getty)
Scott Olson / Getty
Newport Beach, CA

Tesla’s stock price plunged by almost 6 percent after announcing record revenue and record losses as CEO Elon Musk indicated that the robot that builds the vehicles is dead.

Tesla, Inc. (TSLA:NASDAQ) reported record revenue in the first quarter of $3.4 billion, and a record-adjusted loss of $3.35 per share. The reported operating performance was about 4 percent better than the average estimate for the 24 major Wall Street analysts following the company.

The stock initially popped up by 3 percent in after-hours trading on May 2, but gave the gain back during a conference call when CEO Musk described the “super complicated” robot that Tesla’s Silicon Valley engineers designed to build cars has terminally failed. Musk then for the first time disclosed that he plans to do a company restructuring later this month.

Musk has claimed since 2015 that the way Tesla would dominate the auto industry would use artificial intelligence software to “heavily involve Tesla going at the machine that builds the machine.” He added, “This is not just a bunch of robots that are sitting there. It’s programming of the robots and how they interact. And it’s far more complex than the software in the car.”

The bold promise created a cult of personality around Musk as another genius confirming venture capitalist Marc Andreessen’s comment that “Software Is Eating The World.”

Musk promised that production at the former GM/Toyota plant Tesla bought in Fremont, California, would jump from about 1,900 cars a week to almost 10,000 vehicles a week in 2018. Based on the promise, Tesla launched the Model 3 affordable sedan, and took in about $373 million of refundable customer reservation deposits to build 373,000 for delivery before the end of 2018.

But Tesla has only built 23,063 Model 3s as of May 2, and at the current pace of completing just 2,050 Model 3s per week, the company would only have built 84,563 by year’s end, according to Bloomberg.

Breitbart News has reported that the all-electric car company has only reported one quarter of profits in its 14 years with Elon Musk as Tesla’s CEO, and that was only due to cashing in $139 million of California tax credits for supposedly combating climate change.

Tesla had stated that the company would make capital expenditures of about of about $3.5 billion in 2018, or about $850 million per quarter. But the company appears to be cutting back drastically to only $656 million in expenditures in the first quarter.

Despite the savings, Tesla’s working negative working capital doubled from $1.1 billion at the end of 2017 to $2.3 billion at the end of the first quarter. That means that Tesla’s current liabilities exceed current assets by a stunning $2.3 billion.

CEO Elon Musk jokingly tweeted that the company was “completely and totally bankwupt” on April Fools’ Day. But the shareholders were not amused, and the stock plunged. Moody’s Investors Service was also not amused after downgrading Tesla’s credit rating to B3 and its senior notes to Caa1 — a substantial risk of default.

Tesla’s stock price is down 27 percent to $284 in after-market trading on May 3 from an all-time high of $389.60 on September 18.

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