Tesla Inc (TSLA) Cash Problems Appear To Be Getting Worse

Tesla Inc (NASDAQ:TSLA) has had cash flow problems for a while, but these issues appear to be coming to a head.

The electric automaker recently asked suppliers for a refund of a portion of its payment. As CNBC reports, this isn’t the sort of action that a financially secure company typically takes:

While automotive companies asking investors for cash back to support operations is a standard part of the negotiating process, Tesla has repeatedly said it doesn’t need the cash. However, the Sunday memo, in which the company asked investors to return a “meaningful amount of money of its payments since 2016,” suggests otherwise and leaves market watchers wondering if Tesla is being truthful about its cash position.

The company lost about $2 billion last year and burned about $3.4 billion in cash after capital investments. At the end of March, Tesla had about $2.7 billion in cash.

Explaining the move, Tesla commented that “We asked fewer than 10 suppliers for a reduction in total capex project spend for long-term projects that began in 2016 but are still not complete, and any changes with these suppliers would improve our future cash flows, but not impact our ability to achieve profitability in Q3.”

Still, analysts don’t believe this one-time windfall will lead to sustainable profits. That could take several more years, in fact — if it happens at all.

Tesla Inc shares closed at $297.18 on Friday, down $9.47 (-3.09%). Year-to-date, TSLA has declined -4.55%, versus a 6.35% rise in the benchmark S&P 500 index during the same period.

TSLA currently has a StockNews.com POWR Rating of C (Neutral), and is ranked #9 of 24 stocks in the Auto & Vehicle Manufacturers category.