Tesla Inc (Nasdaq: TSLA) investors have not been in a joking mood in recent weeks after a number of negative headlines have sent the stock tumbling 27 percent. On Sunday, CEO Elon Musk decided to make light of Tesla’s precarious financial situation on Twitter, but the market clearly isn’t feeling lighthearted about Tesla’s problems.
Over the weekend, Musk made his own public April Fool’s joke about Tesla. “Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt,” Musk tweeted.
[See: The 10 Most Valuable Auto Companies in the World.]
Tesla stock traded lower by 6 percent on Monday morning.
While the message was obviously a joke, it came less than a week after Moody’s downgraded Tesla’s corporate family credit rating from B2 to B3, a rating corresponding to non-investment-grade speculative debt.
To make matters worse, last week Tesla issued a voluntary recall of 123,000 Model S vehicles due to a power steering issue. The number of recalled vehicle represents nearly half of the total vehicles Tesla has produced up to this point.
Loup Ventures analyst Gene Munster says Tesla will likely not suffer any major direct financial fallout from the latest recall, but there’s more at risk than dollars and cents. “The bigger issue is erosion of brand which impacts demand for Teslas and investors’ willingness to keep funding the Tesla mission,” Munster says.
He estimates the total cost of the Model S recall will be about $60 million. While Munster says his patience is being tested, he is still bullish on Tesla in the long term.
[See: 7 Auto Stocks to Drive Income.]
“Our support is based on a view that the company is uniquely positioned to capitalize on a dramatic shift in auto (computer on wheels), innovate in both EV and autonomy and usher in a new paradigm of manufacturing efficiencies,” Munster says.
Unfortunately for Tesla investors, there may be another negative headline coming in the next day or two when the company reports its first-quarter vehicle delivery numbers. Munster predicts Tesla will report a Model 3 delivery rate of 1,500 per week, well short of its target of 2,500.
More from U.S. News
The 10 Most Valuable Auto Companies in the World
The Top 10 Investment Portfolio for Millennials
These 7 Funds Make You Feel Good About Investing
Elon Musk’s Tesla Inc (TSLA) April Fool’s Day Joke Falls Flat originally appeared on usnews.com
