Why Wall Street Has Mixed Reactions on Tesla Motors Inc (TSLA)?

Tesla Motors Inc (NASDAQ:TSLA)‘s story on the Street has been one of mystery, uncertainty and sometimes hope. The giant electric company has yet to turn in any profit even though its market cap is as much as many major automakers like Honda’s. The stock is up by more than 1,000% over its 2010 IPO price, a run that is impressive by all standards. The Street is however starting to feel jittery after another earnings report that was more or less in line with expectations.

It goes without saying that Tesla Motors Inc (NASDAQ:TSLA) isn’t performing like a $30 billion market cap firm. Over the past few quarters, the market has punished it for profit misses and downgrade guidance on deliveries. The stock is now the subject of a fierce battle between bulls and bears. Some investors think it could be worth what it is now while others have remained wary about its ability to turn in profit in the near term.

Bulls Vs Bears

CEO, Elon Musk, has already joined the Street in questioning Tesla Motors Inc (NASDAQ:TSLA)’s share price. Over the past few years, he has expressed his doubts about the buoyant share price. The big question at the moment is how the company will fair going forward. The Street’s concerns can only continue to grow as the threat of competition in the sector becomes a real.

Bulls have published encouraging research notes quoting areas of strength that could define Tesla in the years to come. Being well positioned to disrupt both the transportation and energy industry has been bull’s story over the years. Bears, on the other hand, continue to raise concerns about the automaker’s ability to execute especially on the delivery front.

Delivery Concerns

Management guidance was a tad lower for the full year in the third quarter earnings call. They now expect to deliver between 50,000 and 52,000 vehicles this year much lower than the initial guidance of 55,000 cars. Tesla will have to build more cars than it has ever had, 17,000 to be specific if it is to meet its guidance. The current position all but justifies the bears concerns on the automakers ability to execute its targets.

RBC Capital market analysts believe Tesla Motors Inc (NASDAQ:TSLA) is learning the ropes of being a manufacturing company. While there is no doubt over its ability to hit targets in the years to come, doing so in a timely matter all but continues to evoke concerns.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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