The Bears Lose Out on TSLA Stock Yet Again
In what’s starting to become a familiar patter, Tesla Motors, Inc. (NASDAQ:TSLA) withstood a flurry of bearish calls on its stock. Amazingly, the naysayers haven’t learned that betting against Tesla, or Elon Musk in general, is a just a bad idea.
I’ll admit that the past few months haven’t been ideal for Tesla stock, but that hardly means that I would flip the script on it. Once it became apparent that Elon Musk had the technical skills and salesmanship to manage the company, I stopped worrying and just enjoyed the ride. Tesla is in good hands.
After all, how often is it that someone like Elon Musk comes along? After building PayPal Holdings, Inc., most people would have just kicked back on a beach somewhere. But not Elon Musk. The guy thrives on creating great businesses that also help push humanity forward.
Rumors were flying that Tesla stock would fall short on its quarterly report. In fact, analysts forecasted a loss of $0.60 per unit of TSLA stock based on guidance from the company. The stock didn’t crater because the loss is expected to be temporary. (Source: “Tesla shares jump 9% despite Q3 results miss,” CNBC, November 3, 2015.)
Tesla stock should make a strong return to profitability in the first quarter of 2016. Here are just some of the highlights from the quarterly earnings that are sending TSLA stock soaring.
TSLA Stock Continues to Run
The big number that saved both Tesla stock and Elon Musk was the number of Tesla vehicles delivered during the quarter. I breathed a sigh of relief for the stock after seeing that 11,603 vehicles were delivered during the third quarter.
Moreover, Tesla stock seems insulated for the next quarter. The range for fourth-quarter deliveries was a reported 15,000 to 17,000, slightly more than analysts predicted. Investors were also concerned about the production schedule heading into 2016, sending Tesla stock into a dip during the intraday trading.
But Elon Musk tempered those concerns by assuring investors that the Tesla Model 3 will be unveiled on time. The long-term outlook of TSLA stock will hinge on the Model 3, since it will be the first Tesla car targeted towards the American middle class.
Luckily, both the Tesla Model 3 and the “Gigafactory”—Tesla’s giant, battery manufacturing centre—are well on schedule. This close to the release date, Elon Musk wouldn’t risk raising expectations out of his reach, because he knows TSLA stock wouldn’t recover from the damage.
On the flipside, meeting its deadlines would open the stock to untold possibilities. I wouldn’t be surprised to see Tesla stock double after the Model 3 and The Energy products hit the market. We could see $500.00 TSLA stock before long.
In the short term, however, growth for TSLA stock could be driven by growth in China.
In a letter to stockholders, Elon Musk wrote: “In China, our newest major market, Q3 Model S orders increased substantially from Q2, due in part to the opening of two new retail locations.”
“We expect order growth in China to remain strong with more store openings and the recent policy changes in Beijing and other major cities that allow buyers of Tesla vehicles to bypass license plate restrictions.”
TSLA Stock Jumps in After-Market Trading
Tesla stock dropped about 2.5% during the day as investors got nervous ahead the earnings release. But once the results became public, it jumped dramatically in after-market trading, climbing 12% at one point.
From my vantage point, Tesla stock isn’t just an investment. Betting on the stock is to support Elon Musk in his wager that the world will inevitably and inexorably move away from the combustion engine.
Investing isn’t about abstract moral arguments; Tesla stock should present a solid commercial proposition. Elon Musk understands that. He isn’t just a bleeding heart liberal with an unreal sense of the world; this guy is big time. He’s a winner and so is TSLA stock.