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Tesla share price falls 5% on April Fool joke

Most readers will be aware that Tesla is one of the largest technology companies in the world trying to make a big electric difference.

Tesla has produced high-end electric vehicles for many years that have impressive gadgets and insane acceleration. Those cars look impressive, expensive and drive almost silently.

The tech company is also a large player in the solar tile roof and home battery spaces.

Elon Musk, the man behind Tesla, has always wanted to produce a mass-market car. If Tesla can produce a car that nearly anyone can buy it could rapidly shift the motor market to electric vehicles.

The Tesla 3 is meant to be that mass-market car, it could have a price similar to other mass-market cars. The problem is that Tesla is having production issues. Mr Musk said that Tesla would be producing 5,000 Model 3s per week by the end of 2017.

According to the blog Jalopnik, Mr Musk sent an email to employees saying that Tesla may now exceed a production rate of 2,000 cars per week. Obviously this is less than 50% of the original production goal and it’s causing Tesla to burn through a lot of the cash reserves.

It didn’t help that on 1st April Mr Musk made an April Fool joke saying on Twitter “Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt. So bankrupt, you can’t believe it.”

Another tweet said that Mr Musk “was found passed out against a Tesla Model 3, surrounded by “Teslaquilla” bottles, the tracks of dried tears still visible on his cheeks.”

Some people may have found the joke funny, but Tesla shareholders won’t be smiling as the Tesla share price dropped by over 5% in response.

Foolish takeaway

Tesla has wonderful long-term goals and if it succeeds it could completely change the motor world. But, Tesla isn’t immune to cash burn, share price plunges and conventional valuation methods. Today’s share price fall could be an opportunity, but it could pay to wait as there could be more falls in store until Tesla ramps up production to the full 5,000 cars per week.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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