Tesla (TSLA) Stock: Tumbling As Expenses Wane

Tesla Inc (NASDAQ: TSLA) is having an incredibly rough start to the trading session this morning, and for good reason. The company’s widening losses are starting to take a toll, and the company is just now finally starting to do something about it. Today, we’ll talk about:

  • Why TSLA is climbing;
  • what we’re seeing from the stock; and
  • what we’ll be watching for ahead.

TSLA Gets Serious About Expenses

As mentioned above, Tesla is having a rough day in the market today as expenses take center stage. The news that the company is finally going to start working on expenses came out in a letter to employees.

In the letter, Elon Musk, CEO at TSLA, said that he and the company’s newly appointed CFO, will personally review all expenses going forward. This is all part of a hardcore attempt to cut costs following tremendous losses that were reported in the last quarter.

In the email to his employees, Musk outlined the importance of examining every expense at the company, no matter how small. He went on to outline the financial struggles that the company is facing.

After all, while the company had $2.2 billion in cash on the books at the end of the first quarter, that $2.2 billion wouldn’t last long. In fact, in respect to this, Musk wrote the following:

This is a lot of money, but actually only gives us about 10 months at the Q1 burn rate to achieve breakeven!

As part of this process, Musk said that all teams will be examining every payment, including parts, salary travel, expenses and rent. Once all expenses are listed, the new CFO will review and sign every page of the outgoing payment log, while Musk said that he would personally review every 10th page of TSLA expenses.

In the email, Musk went on to say that while this is a hardcore measure, it is the only way that he believes that the company will reach financial stability.

What We’re Seeing From The Stock 

One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to Tesla, the news proved to be overwhelmingly negative.

After all, the company is having to go into cost cutting mode with only enough funds to last ten months, even after the recent $2.7 billion capital raise. So, it’s not surprising to see that upset investors are pushing the stock down in the market this morning.

As is just about always the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (9:13), TSLA is trading at $222.15 per share after a loss of $6.18 per share or 2.71% thus far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on TSLA. In particular, we’re interested in seeing if the company has what it takes to stop the bleeding before the need for another capital raise. Nonetheless, we’ll keep a close eye on the story and bring the news to you as it breaks!

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