TU-TESL

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It remains to be seen whether it can maintain the momentum it gained after the third quarter of 2019 earnings report. To the dismay of most critics and doubters, however, it now appears that the electric car maker's situation may be improving. Tencent technology news on November 8, according to foreign media reports, driven by stronger than expected cash flow and recent debt reduction, S & P global ratings, a US financial services giant, recently announced its decision to adjust the credit rating of Tesla, the electric vehicle manufacturer, from "negative" to "positive". Prior to that, financial institutions such as Moody's and Deutsche Bank also adjusted their ratings on Tesla. Interestingly, S & P chose to directly adjust its "negative" rating to "positive" rating, bypassing the "stable" rating in the middle. It believed that Tesla would maintain high demand for its products and achieve higher manufacturing efficiency. "The optimistic outlook reflects a significant increase in the likelihood that Tesla's credit metrics will improve beyond our base case forecast due to higher demand and manufacturing related efficiency gains," said S & P S & P currently has a b-rating for Tesla, which it set for the electric vehicle manufacturer in June 2015. During Tesla's efforts to increase production and model 3 production, the company's rating was mostly "negative" due to the company's profitability and capacity challenges. However, these challenges now seem to have been addressed by Tesla, at least in part, as evidenced by its strong third quarter 2019 results. In the third quarter, Tesla returned to profitability, delivering and producing a record number of cars. Through its results in the third quarter of 2019, Tesla is able to demonstrate that model 3 can be profitable even when it is launched to the market. Compared with the flagship model and model x, model 3 is obviously more affordable. So far, Tesla's shares have fallen about 3% so far this year. This contrasts with a 23% rise in the S & P 500 and an 18% rise in the Dow Jones industrial average. After a challenging first and second quarter, Tesla struggled most of the year and is now ready to make more progress in the fourth quarter. This month, Tesla's gigafactory 3 in Shanghai is ready to go into operation, which will allow the company to enter the domestic electric vehicle market without increasing tariffs. Tesla will also launch its latest model in Hawthorne, California, on November 21, what Elon Musk calls the electric pickup cybertruck. It remains to be seen whether Tesla can maintain the momentum it gained after the third quarter of 2019 earnings report. To the dismay of most critics and doubters, however, it now appears that the electric car maker's situation may be improving. Coincidentally, Deutsche Bank is also optimistic about Tesla's outlook, adjusting its credit rating to positive. After meeting with Tesla executives in September, the Bank predicted that Tesla might be moving towards a turning point in profitability, especially in regions such as Europe and China, where it could have a significant impact. At the time, the financial company wrote: "overall, we found that the company's recent developments reflected in Tesla's information are optimistic, and the next 12 months will be a turning point for the company to achieve profitability. In the near future, Tesla said that its model 3 sales increased steadily, the UK demand was strong, and the European and South Korean market demand potential was huge, which may help to increase the gross margin. In addition, Chinese plants are expected to be put into production by the end of the year, credit for FCA transactions should increase substantially, and model y should start production in the autumn of 2020, which Tesla expects will bring more additional boost to profitability and cash flow. " Christopher Eberle, an analyst at Nomura investment, agrees that this is partly because Tesla seems to be settling down and focusing on delivering. Even on the day of the most volatile share price last year, musk, who tends to tweet, remained relatively silent, commenting mainly on the progress of Tesla and SpaceX projects. "This is exactly the low controversial stance that we and many investors have wanted to see from Tesla for some time," he said. If the company continues to achieve its operational and financial objectives, we believe Tesla will have a better future. In terms of market share, North American demand seems to be stable and strong. We still believe that there is no need to worry about consumer demand. " At the end of August this year, Moody's, a rating agency, also adjusted Tesla's rating, including B3 enterprise family rating (CFR) and caa1 senior unsecured rating, and upgraded its speculative Liquidity Rating from sgl-4 to sgl-3, with the outlook changing from "negative" to "stable". Tesla's B3 CFR reflects its achievements in solving major manufacturing and assembly obstacles in the large-scale production process of model 3. With model 3 production now in line with Moody's earlier expectations, the company should be able to achieve productivity, reduce costs and increase gross margins on cars. This is necessary if Tesla's car sales are to offset the huge losses incurred by the car service business and enable it to maintain its net profitability. In addition, Tesla's increased experience in the production process has significantly reduced the level of capital expenditure needed to support its growth plan, with annual capital expenditure dropping from about $4 billion in 2017 to the current $1.5 billion to $2 billion, which has greatly improved the expected cash flow. Nevertheless, Moody's still expects the company to generate a moderate negative free cash flow in the next 12 months, possibly around $500 million. Finally, Tesla's liquidity remains sufficient to meet its 2021 debt maturity and the operational challenges it will face in the coming year. If Tesla is able to demonstrate sustained profitability and positive free cash flow in its rapid expansion plans in Europe and China, the rating may be upgraded. The company also needs to maintain sufficient liquidity to support a higher rating.