Tesla curbs paint choices to simplify production - Roadshow

Tesla stocks tumbled this week after CEO Elon Musk appeared to smoke pot in a podcast. In addition two top executives said Friday they were leaving the company

Tesla stocks tumbled this week after CEO Elon Musk appeared to smoke pot in a podcast. In addition two top executives said Friday they were leaving the company

Tesla shares bounced Monday following an upbeat analyst note that suggested worries about chief executive Elon Musk and his various controversies were exaggerated. Clearly, as added by experts, Tesla is still a greenhorn when it comes to mass production.

But he wasn't joking or trying to bloat Tesla fans' confidence in the company. On Thursday, CEO Elon Musk was filmed smoking marijuana during a live interview.

Shares of the company, which closed up 8.5 per cent at $285.50 on Monday after two brokerages said it could meet its production targets for the second half of the year, fell almost 2 per cent before the bell on Tuesday.

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Anxious about what he called the "erratic behavior of CEO Elon Musk", Shah trimmed his price target to $300 from $400 - still 5% above Tesla's Monday closing price, but a huge cut. The former CFO of Seagate, stated in a letter that "since I joined Tesla on August 6, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations", Morton said in the filing.

Tesla's decline has been driven by accelerating "management credibility issues", Needham & Co. analyst Rajvindra Gill wrote in a report on Monday.

The announcement follows a chaotic week for Tesla in which Musk lost his chief accounting officer after less than a month on the job, then smoked marijuana during a late-night podcast hosted by a California comedian.

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That schedule is likely to concern some customers, as they will begin to lose access to a $7,500 tax credit for Tesla vehicles beginning in January, when the credit gets cut in half.

On August 1, Musk told analysts that Tesla plans to pay off its debt instead of refinancing it. Musk has also shot down speculation that Tesla will need to raise cash by selling more stock.

"They can expect, I think, a substantial amount of people pulling their reservations", Acevedo said.

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Contrary to an emerging Tesla bear thesis that demand for the Model 3 is declining, the analysts noted that the electric vehicle maker is now focused on selling higher-margin cars such as the Model 3 Performance and the Long Range AWD Model 3, where "demand continues to exceed what is being produced". Analysts say Tesla may struggle to raise cash until the dark cloud of an SEC investigation is lifted.

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