Close up of Tesla logo on a charger at a Supercharger rapid battery charging station for the ... [+] electric vehicle company Tesla Motors, in the Silicon Valley town of Mountain View, California, August 24, 2016. (Photo by Smith Collection\/Gado\/Getty Images).<\/p>\n
Trefis analysis shows Teslas (NASDAQ: TSLA) stock could potentially drop to $0 from its current levels of over $500. We outline how Tesla could end up defaulting on its roughly $13 billion in debt, a meaningful portion of which matures over the next 4 years. Whats the trigger? We first consider the case of recession or a soft economy as a trigger to lower revenues, margins and a cash crunch. Then we highlight how there are other possible triggers that could lead to a similar set of events.<\/p>\n
Below we discuss the specifics of Tesla Stock Downside included with our interactive charts to test sensitivity to underlying assumptions. Deeper insights on Tesla Revenues and Tesla expenses as well as Tesla P\/S multiple, are also available separately as context to this analysis. Additionally, we provide a counter analysis to our Tesla downside case in our interactive dashboard for Tesla Stock Upside: $2,000?<\/p>\n
#1. Teslas Revenues could decline over 35% between 2020 and 2022, falling from $32 billion to $21 billion, in the event of a recession<\/p>\n
We analyze and compareTesla deliveries with BMWand other luxury car-makers, to paint a broader picture.<\/p>\n
#2. Teslas Gross Profits could decline from over $6 billion in 2020 to about $3.6 billion by 2022<\/p>\n
#3. Teslas Free Cash Flows could turn negative again<\/p>\n
For more details on Teslas free cash flows, view our dashboard analysis about Tesla Stock Downside<\/p>\n
#4. The negative cash flows could hurt the companys ability to service its debts when they come due<\/p>\n
Recession the only possible trigger? No there are other risks<\/p>\n
The above events leading to Tesla default can be triggered by many types of risks. We outline some below<\/p>\n
If the company were to face one or more of these issues independently or alongside a recession, its possible that financing could dry up for Tesla at the time when it has to pay its debts.<\/p>\n<\/p>\n
Teslas stock has a track record of reacting very strongly to news<\/p>\n<\/p>\n
See allTrefis Price EstimatesandDownloadTrefis Datahere<\/p>\n
Whats behind Trefis? See How Its Powering New Collaboration and What-Ifs ForCFOs and Finance Teams |Product, R&D, and Marketing Teams<\/p>\n
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Heres How Teslas Stock Could Hit $0 - Forbes<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Close up of Tesla logo on a charger at a Supercharger rapid battery charging station for the ... [+] electric vehicle company Tesla Motors, in the Silicon Valley town of Mountain View, California, August 24, 2016. Continue reading