Ratings agency Standard & Poor's recently assigned
) an unsolicited "B-" credit rating. This is well below investment
grade, as you can see here:
S&P gave Tesla a "vulnerable" business risk profile due to
"narrow product focus, concentrated production footprint, small
scale relative to its larger automotive peers, limited visibility
on the long-term demand for its products, and limited track record
in handling execution risks that could arise in managing high
volume parallel production."
S&P also believes that Tesla's business risk profile is
"constrained by [its]
niche and independent market position
, compared to its significantly larger and stronger peers, and its
very limited product range and operating diversity."
Standard & Poor's expects
global competition for alternative fuel vehicles to
intensify over the next few years
as competitors penetrate this market through improved products
. S&P also believes that
there is considerable uncertainty in Tesla's long-term
and believe that the company is less likely (compared to larger,
more established automakers) to successfully adapt to competitive
and technological displacement risks over the medium to long
The review wasn't all bad though. S&P gave Tesla a "stable"
near-term outlook, reflecting the company's recent improvement in
gross margins and the fact that the company will likely generate
positive operating cash flow this year
"while maintaining sufficient liquidity."
Shares of Tesla were down on the news. But the stock is up
nearly +40% year-to-date and +115% over the 52 weeks year.
Do you agree with Standard & Poor's assessment of
Chime in below!
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