Tesla Motors Inc (TSLA) Stock May Rest a While After 6 Year Dream Run

Tesla Model 3 (TSLA)

Tesla Motors Inc has enjoyed a dream run since it’s IPO in June of 2010. Offered at $17 per share at the IPO the stock has made many millionaires.  Lately though, the stock has cooled down.  The firm had pleasant news for its investors on Sunday that deliveries for Q3 were 24,500 – better than expected. The automaker guided to a stronger Q4. The EV firm will possibly meet its 50,000 deliveries goal for the second half of the year if that happens. The stock – as was expected – saw a good hike of 5% on Monday, but this did not last for long as the shares started retreating since then.

The share price saw only a modest rise despite it delivering almost 25,000 vehicles, and producing even more (5,000 vehicles in were in transit). This means that even if it manages to meet its 2016 deliveries guidance of 80,000-90,000 vehicles, it won’t see a big bump, notes Business Insider.

Tesla Motors Inc. (TSLA) Stock Chart

Tesla stock – growth already priced in

Tesla Motors Inc has scheduled to release Model 3 later in 2017, and the bulls would be interested in seeing, if Tesla keeps it to the schedule this time. The vehicle will be priced at $30,000 after tax incentives, and have a 200-plus-mile range. The EV firm has taken 375,000 pre-orders on the vehicle (at $1,000 each), and timely arrival will enable Tesla to earn billions for those.

Tesla might actually be waiting for a profitable quarter, which is unlikely, as it has its focus on SolarCity’s $2.6bn acquisition, and is completing a $6bn battery factory in Nevada. Bull case for Tesla is really strong, and it sees shares heading much higher to $300 or $400 or even higher. But, it can’t be seen as of now what would take it to that level, notes a report from Business Insider.

As per BI, the priced thesis around Tesla stock appears correct for the moment. Some are of the opinion that Tesla has already captured all the growth it can for now, at its current valuation. So, the investors buying stock today will be required to wait for a while before the stock moves up.

Record delivery numbers – last short-term potential catalyst

Separately, Goldman Sachs’ analyst Patrick Archambault also somewhat thinks the same. The analyst noted that the production ramp for the Model 3 would expectedly be slower than what Tesla is guiding. However, he does expects the EV firm to report a profit in Q3 of $0.28 – the first in 3 years.

The record delivery numbers in the Q3 are the last short-term potential catalyst for the stock, and for this reason he prefers to be neutral on the stock, the analyst said.

Tesla Motors Inc stock has grown at an epic rate and anyone who bought it after its 2010 IPO has seen a better-than-1000% return. But, the growth is over now, at least until the end of next year.

Disclaimer: The above should not be considered or construed as individualized or specific investment advice. Do your own research and consult a professional, if necessary, before making investment decisions.

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    Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.


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