Tesla will be profitable this year and will not require any funding,...

Tesla will be profitable this year and will not require any funding, Elon Musk


Tesla Inc. will start generating profit from the third quarter of 2018 and it won’t require any funding from investors, Chief Executive Elon Musk stated Friday. Tesla shares rose more than 2 percent in the last trading session following optimistic comments from CEO.

Musk statement also undermined Wall Street prediction that the company may have to approach capital markets again to raise money as it accelerates Model 3 sedan production.

A recently published report in The Economist said the electric car maker would need additional funding in between $2.5 billion and $3 billion. Musk responded to the report and wrote on Twitter that “the Economist used to be boring, but smart with a wicked dry wit. Now it’s just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money.”

Contrary to Musk claim, Wall Street firm Jefferies projected that refinancing risk will stay high for Tesla unless it can produce 10,000 Model 3 unit per week on regular basis.

Tesla has a history of not fulfilling its production targets. The company fell short of its own weekly target of producing 2,500 units at the end of the first quarter. Analysts even doubt its assurance of production growth and reaching 5,000 Model 3s on weekly basis in three months.

In a recently aired interview with CBS News, Musk said that Tesla altogether has put too much new technology into the Model 3, which has been causing production delays. The company is currently producing 2,000 Model 3 cars every week, he added.

Moody’s Investors Service lowered the Silicon Valley car maker’s credit rating from B2 to B3 last month, citing the substantial shortfall in the production rate of Model 3. The research firm also said that its negative guidance for the company reflects the possibility that Tesla will require a large near-term capital raise.

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I handle much of news coverage for tech stocks, and occasionally cover companies in different sectors. In the past, I've written for other financial sites and published independent investment research, primarily on tech companies. I have a B.A. in Economics from Columbia University. I'm based out of San Diego, but grew up in Southern New Jersey. I play basketball and tennis in my spare time, am a long-time (and long-suffering) fan of Philadelphia's sports teams, and alternate daily between using an iPad Air, a Galaxy Note 3, and one or two Windows PCs.