Tesla, Inc. shares opened 5% lower on Wednesday after Moody’s Investor Services downgraded the electric car maker’s corporate family rating from B2 to B3 and cut its senior notes to Caa1 earlier this week. Given the Model 3 production shortfall, significant negative cash flow and pending maturities for convertible bonds, the credit rating agency believes that Tesla will need a sizable equity raise in the near term to avoid a cash crunch.
Oppenheimer analysts also cited the National Transportation Safety Board’s investigation of the accident on Highway 101 last week and NVIDIA Corporation’s move to suspend its advanced driver-assistance system (ADAS) testing program as potentially holding back Tesla stock from moving forward. Oppenhiemer believes that the debt issue would be amplified in equity pricing, while the increased scrutiny of ADAS programs could spill over into Telsa’s systems. (See also: Tesla Downgraded by Moody’s Amid Model 3 Production Woes.)
Tesla shares moved sharply lower after Moody’s downgraded its debt, but traders will be watching these key levels ahead. …read more
Read more here: Tesla Stock Breaks Down After Debt Downgrade
Category: TSLA, NVDA