"This is all going to get fixed real fast," he said in comments recorded on May 31, but not released until late Wednesday. "Both Berlin and Austin factories are gigantic money furnaces right now. There's a giant roaring sound which is the sound of money on fire. Bigger than a dumpster [fire]. A dumpster is too small. Berlin and Austin are losing billions of dollars right now. There's a ton of expense and hardly any output."
"Bankruptcy is a real risk for these guys," Gordon Johnson of GLJ Research commented. "Why? A lot of their cash is locked up in China. They weren't profitable until they were in China; and, given China does not allow companies to repatriate dollars made there out of the country, and Tesla has a real problem."
Johnson pointed to Tesla's decision to cut about 10% of its salaried staff — even as it continues to hire hourly production workers — as another sign of trouble. "Why do you think they are cutting people? That's a key tell-tell signal," he said.
Tesla should remain profitable
But most companies that cut staff never come close to filing for bankruptcy. And virtually all other analysts forecast that Tesla will remain profitable, despite the supply chain issues dogging it and most other manufacturers around the globe.
Tesla has been profitable since late 2018, after years of reporting almost nothing but losses. The company has been reporting increased quarterly profits compared to the previous period for the last two years.
That string of sequentially rising profits is apparently about to come to an end.
Analysts surveyed by Refinitiv forecast that adjusted earnings in the second quarter will fall to $2.5 billion in the second quarter, down from the record $3.7 billion Tesla made in the first quarter. That would still be up from the adjusted income of $1.6 billion in the second quarter of 2021.
Tesla did have a 0.1% dip in production of new vehicles in the first quarter compared to the fourth quarter. But its year-over-year production was still up 69%, and most other automakers worldwide scaled back production in the quarter from year-ago levels due to supply chain issues.
Automakers, including Tesla, are due to report second quarter sales figure early next month.
Shares of Tesla (TSLA), which are down nearly a third since the start of the year, were down roughly 2% in midday trading Thursday.
IMAGE SOURCE: PIXABAY