Tesla Inc (NASDAQ:TSLA) surged 2.2% in Monday’s trading to nab a yet another fresh all-time high. TSLA stock is on the verge of testing the $350-a-share level, representing a whopping 94% rise from their early December low.
There was no specific catalyst for the move; only a continuation of the momentum bid shareholders have enjoyed.
In fact, if anything, there have been headwinds lately, including the decision last week by President Donald Trump to . Tesla CEO Elon Musk derided the decision, which resulted in his resignation from a presidential advisory council. It’s also a decision that raised concerns Trump could roll back the subsidies and taxpayer-funded investments in “green” technology so important to TSLA.
We also have the eagerly anticipated launch of the Model 3 sedan next month. Expectations look set way too high, based on Musk’s on promises. Guidance is for output of 10,000 Model 3s per week by 2018 — or roughly five times the current Model S and Model X production combined.
And there were also embarrassing headlines that AAA was raising premiums on Tesla vehicles by 30% after data showed , adding further upward pressure to overall cost of ownership.
But above all, the bulls continue to ignore the fact the company isn’t profitable, burned through $620 million last quarter, and is losing $13,000 on each car made. All this for a company that is worth more than Ford Motor Company (NYSE:F) and General Motors Company (NYSE:
GM), both companies that make far more vehicles and actually, you know, earn a profit.
Bottom Line on TSLA Stock
I guess this behavior really sums up the current market environment, where hope, tech hype, and momentum trumps fundamentals.
Unless the Model 3 ramp up goes off without a hitch, some reality could soon break the fever dream. Especially with Tesla extending vendor payment terms (a sign of cash hording), a decline in customer deposits on new orders, and with legacy automakers like GM stepping up their game in the EV space (the Chevy Bolt beat Tesla to market with a 200-mile, $30,000 EV).
Tesla will next report results on Aug. 2 after the close. Analysts covering TSLA stock are looking for a loss of $1.71 per share on revenues of $2.6 billion. Second-quarter deliveries will be reported on July 1.
Anthony Mirhaydari is founder of the (ETFs) and (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
