The company seems to be increasing its capital expenditures at a very quick pace, which is turning out to be troublesome for investors.
According to recent Tesla news, it was seen that the growing problem of increasing expenditures being carried out by the company is taken as a serious issue by the investors now. Last quarter, the electric carmakers reported some strong figures in the sales and revenue department, which created bullish sentiments of the investors and analysts towards its stock.
Furthermore, the company also turned out to predict a stronger than before guidance for the next quarter in line which has brought all the attention in the market to how many progressive plans it seems to be carrying for it to expect great sales output in the next fiscal period.
However, analysts at Motley Fool have shed light on the ever-increasing expenditure numbers that seem to be taking their toll for Tesla business, as it has reportedly spent around $800 million to cover expenses of two fiscal quarters, which is being taken as a huge amount to be paid by any company for the capital expenses alone.
In the letter presented to the shareholders to inform about the activities of the company during the third quarter of the year, it was seen that the information provided regarding the cash flow was rather on the negative side to be considered with the capability to make the investors turn majorly bearish towards the stock in the near future.
Currently, the increasing cash flow is one problem but the fact that Tesla operations, which are being carried out in a big number now, are not bringing back enough cash to the company either. This means that the expenditures it is paying for are not being backed up by a strong cash reserve. This, undoubtedly, means that eventually, the smart carmakers are going to face some deadly issues in its business that will be directly made evident on the stock index.
To look after the problem, the company also needs to analyze what new steps it can take to not only cut down the expenditures, but also help it to generate quick cash flow on the regular basis. This should be the priority for it to calm the investors.
More importantly, Tesla stock’s present situation can be understood by taking into consideration the actual amount that the hybrid carmakers spent to cover capital expenditures, which is reportedly $392 million for the past quarter, while the negative cash flow was recorded at $203 million by the auto making company.
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