The Tesla stock price has been very volatile in the recent times and is still trading at fifteen percent below its 52 weeks high. However, the price is still up by one hundred percent over the last one year and almost six percent higher than the start of 2013 price. Some experts are estimating the price to double again.
The company reported earnings on last Wednesday, which set the stock out on a roller coaster ride. The earnings report showed better than expected sales and profits. However, the company has lowered the forecast for the number of vehicles that will be delivered in the current year.
One way to look at the four percent increase in Tesla stock price is the struggling Wall Street situation related to growth companies. Third quarter earnings provides ammunition to skeptics who were expecting low sales and production delays.
This stock is clearly headed towards the $400 per share mark. The company has posted earnings of two cents per share contrary to the perception of a one cent loss by Wall Street experts. The company has also lowered fourth quarter guidance to range between thirty and thirty-five cents against the expectations of seventy-five cents.
Tesla continues to bleed cash ($100 million every quarter) and as a result the company is starting to borrow heavily. I think the company has an ultimatum to start being profitable or else chapter11 coming up...
Agreed, the CEO, Elon Musk , was quoted saying If we're unable to do that [scale production to be cash flow positive], we'll enter the grave yard with all the other car company startups of the last 90 years.
I would reconsider investing in Tesla because of recent reports. It has been pretty stable thusfar, but the CEO was just interviewed mentioning the National Clean Air Summit and the company's need to amp up production to receive a particular and vital gross margin in order to be cash flow positive.
I was wondering whether Tesla is a good investment for the long run? On the positive side, electric cars are the future and the company seems to have great potential to grow.
But on the negative side, the company won't be profitable until beginning of 2014, the company is facing fierce competition from all major carmakers out there that are each launching there own cheaper electric vehicle, driver behavior could change dramatically towards the Zipcar car-sharing form, and finally the company's latest Model S sedan that is cheaper than the 100k Roadster could experience production delays and end up costing a lot more than originally expected.
So it seems a lot of negatives that could outweigh the positive aspects of TSLA. Any thoughts?