Tesla Stock Stumbles as Company Asks Suppliers for Help Turning a Profit
- Author: Anthony Vega Jul 25, 2018,
Jul 25, 2018, 1:17
"The Silicon Valley electric auto company said it is asking its suppliers for cash back to help it become profitable, according to a memo reviewed by The Wall Street Journal that was sent to a supplier last week".
Telsa took another financial hit on Monday, with shares in the electric carmaker dropping nearly 5 per cent after it was reported to have asked some United States suppliers to return payments made by the money-losing company. However, a spokesperson at the company did confirm that Tesla has been seeking price reductions from suppliers for projects, some of which date back as far as 2016.
The leak comes soon after Tesla announced it is cutting several thousand jobs as part of an effort to reduce costs.
The leak comes as Musk continues to unnerve investors, with Tesla shares falling from a year high of US$370 in mid-June to around US$301 on Monday.
At the end of its last reporting period, Tesla revealed that it had about $3.3 billion in cash on hand as had lost about $800 million for the quarter.
Apparently, fewer than 10 of Tesla's suppliers were asked to provide a retroactive discount, and the company assured Digital Trends that there was no widespread memo sent to all of its business partners.
The refund request applies to money that Tesla has paid to some suppliers since 2016, according to the Journal.
David Whiston, an analyst at...
The request indicates more struggles for Tesla in its quest to reverse losses.
Musk took to Twitter to comment on the allegations made by the Wall Street Journal, claiming "only costs that actually apply to Q3 and beyond will be counted". "It's simply ludicrous and it just shows that Tesla is desperate right now", Dennis Virag, a manufacturing consultant, told The Wall Street Journal.
"This is one more sign that money is getting shorter and shorter and I am sure that Tesla needs fresh money at the latest next year", said Frank Schwope, an analyst with NORD/LB.