Tesla Stock Turns Bearish as Model 3 Production Disappoints Investors

by | 4 Jan, 2018

Will Tesla ever make good on its promises about the Model 3?

Will Tesla ever make good on its promises about the Model 3?

Shares in electric auto-maker Tesla slipped this Thursday on American stock markets, after the company announced production targets of Tesla’s highly sought after Model 3 cars had been pushed back yet again!

In the latest disappointing news for Tesla investors, the company revealed they delivered 29,870 vehicles in Q4 2017, with only 1,550 of those being Model 3 cars. These numbers fell short of forecasts, while it pushed back production targets for the Model 3 as well. This puts the Model 3 at under 2,000 deliveries for its first six months, while the Chevy Bolt just announced its best month ever at more than 3,000 units delivered. A damning comparison.

In 2017 the company said it planned to reach a production rate of 5,000 Model 3 cars per week by the end of the year, but later revised back this target to the end of Q1 2018.

Now however it says it doesn’t expect to reach this target until Q2 this year (representing yet another delay). It said it had made “major progress” toward addressing production bottlenecks, but these words will ring hollow for investors who are growing increasingly frustrated.

Tesla figurehead Elon Musk said in October that the company had been “deep in production hell” making the Model 3. The car is its first attempt to create an appealing electric vehicle for the mass market and not just niche enthusiasts.

Some investors believe the issues in the production chain could be more easily resolved if Musk spent more time on Tesla instead of his other ventures (The Boring Company and SpaceX).

Here’s the Invstr 1 month chart for Tesla’s stock. It’s been a poor December for shareholders.

Under Armour Stock Suffered

 

With all of this being said, we believe Tesla is undoubtedly a fascinating company and a stock to watch for the long term.

Setbacks in production, though frustrating, are not unusual for a business which is so focused on revolutionising the auto-sector and the way humanity will travel in the future. We think investors understand that too.

Tesla’s tentacles keep spreading further across the auto-industry. Elon Musk announced the Tesla ‘Semi’ truck in November 2017, a fully electric alternative to traditional trucks, which seems as if it will genuinely be able to compete in the space with its regular diesel/petrol counterparts.

Then there is his side-line projects like The Boring Company, which aims to relieve congestion on American roads by creating huge underground tunnels for traffic to flow through, as well as his ambition to give people the chance to travel around the world at rapid speeds via spacecraft (London to New York in 29 minutes, anyone?)

Overall, those who are shorting Tesla stock at the first sign of issues (like this production problem) are probably not the sort of people who should have bought the stock in the first place. If you believe in Elon Musk and his aspirations, then this is a long-term buy and hold where you shouldn’t jump ship when hiccups occur along the way. You can see that by looking at just how far Tesla’s vehicles have already come since its inception in 2003.

 

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Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
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ALL RIGHTS RESERVED © INVSTR LTD. 2017

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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