Tesla Model 3 News
Tesla Inc (NASDAQ:TSLA) is one of the most divisive companies on the planet. Whereas some see world-changing tech and a genius entrepreneur at the helm in CEO Elon Musk, others see an overhyped vehicle that is bound to crash—and take the Tesla stock price with it. One of those doubters is hedge fund billionaire David Einhorn. But, in my humble opinion, Einhorn is wrong. The Tesla “Model 3” news, as reflected by the growth in TSLA stock value, is all going in Elon Musk’s favor.
I believe that Tesla stock is headed in one direction: up. By 2018, I project that Tesla shares will be firmly in the $400.00 price range and continuing to grow.
Of course, that’s by no means guaranteed. What on the stock market is, after all? Tesla Model 3 deliveries could be late or otherwise fall short of their lofty expectations (which has happened many times in Tesla’s history, and we’ll touch on that later) but, even if setbacks are in store for TSLA stock, I believe that the future is bright (and lithium-powered). Besides, Tesla stock in the next three months won’t have to worry about making Model 3 deliveries, as those aren’t slated until 2018.
Another reason that I believe we’ll be seeing big things from this company in the near future is that the Tesla Model 3 news has been largely positive, and some has even delved into fawning territory.
The fact is that we haven’t seen mass fandom like this since Apple Inc. (NASDAQ:AAPL) jumped on the scene with its “iPhone” offerings, and we all know how that turned out.
In fact, I believe that, in many ways, Tesla compares favorably with Apple in that era. You have a revolutionary tech that, while not exactly invented by the company, is certainly seeking to perfect electric vehicles, all the while injecting style and features that will help differentiate itself from its competitors. And one big thing that Tesla has going for it: It’s cool.
Yes, yes, that seems a little sophomoric, but don’t underestimate how much “cool” can move products. Just as Apple was able to harness hype and cool, turning it into billions of dollars, I see Tesla having the potential to do the same thing.
And remember, Tesla is not only an electric vehicle company. After absorbing SolarCity Corp (NASDAQ:SCTY) last year alongside building the “Gigafactory” and otherwise having its sights set on making lithium-ion batteries the energy storage tool of choice, there are a lot of reasons to believe that Tesla stock is on its way to a big 2018, and otherwise a very bright future going forward.
Not to mention that the Model 3, being the first truly mass-consumer electric car, due to its reasonable price, has the potential to be the catalyst for one of the stock price’s biggest surges yet.
But everything is not all rainbows and roses in Tesla’s world. Let’s cover why David Einhorn and others are doubtful of Tesla, and what could go wrong for the Tesla stock price.
David Einhorn and the Downside of Tesla
David Einhorn isn’t taken in by the Tesla Model 3 news for one major reason: his strategy favors value over growth. What that means is that, when he looks at a stock, he likes to see what the company has to offer right now, versus its potential. It’s a line of thinking that has helped him be successful in many different industries, although he has lost big in tech this year.
He bet against Amazon.com, Inc. (NASDAQ:AMZN), which is up 32% year-to-date, and against the Tesla stock price, which has skyrocketed upward by over 70%. (Source: “Tesla Could Run Out of Cash Making the Model 3, Hedge Fund Billionaire Says,” Fortune, August 1, 2017.)
Chart courtesy of StockCharts.com
His main concern is that Tesla is expected to burn over $2.0 billion in cash as it begins to produce the Model 3, and will require outside capital and investment to keep it going. As it stands right now, Tesla is only capitalized for the next three quarters.
But the market has been generous to Elon Musk, and there are a great many bulls who would love to get in on the action. So I doubt they’ll have trouble finding money, which basically discounts David Einhorn’s bearish projections.
Of course, as I mentioned earlier, Tesla Model 3 deliveries could be a big problem. Tesla plans to build 500,000 cars in 2018, then a million in 2020. The company didn’t even produce 84,000 in 2016. And even then, it missed its projected build number.
That all might change, however, now that the Gigafactory is up and running. While not fully completed yet, what Elon Musk called the “machine that makes the machine” is another key piece of the foundation that the Tesla CEO hopes will support his empire. (Source: “Tesla Gigafactory is already producing more batteries than any other factory in the world, says Elon Musk,” Electrek, August 8, 2017.)
Elon Musk claims that the factory is already producing more lithium-ion batteries than any other factory of the world.
With Tesla’s plan to build more of these automated mega-factories in the future, Tesla’s ability to supply its fleet with batteries could be dramatically sped up by these new-age production facilities. It’s yet another way that Tesla plans to innovate and dominate the electric vehicle market.
Whether you believe the hype around the Gigafactory, Tesla Model 3 deliveries won’t affect Tesla stock in the next three months, as the car has yet to fully hit the market.
So, while there’s a fair possibility that Tesla may miss those numbers, that won’t stop Tesla in the long run, just as the company’s problems only proved to be speed bumps on Tesla’s huge run over the past few years, rather than roadblocks.
Tesla Stock Price
The TSLA price jumped as a result of Tesla Model 3 news to 70% gains since the beginning of 2017.
Similarly, the stock price is going to grow on the back of all this good news, and we’re likely to see a big boost for Tesla stock in the next three months, with gains of at least 10%, by my estimation.
In case you haven’t noticed, I’m a big bull on Tesla, and I think that it is—and will continue to be—one of the hottest investments on the market.