Tesla's Next Move: $200 or $500?

02/16/2018 5:00 am EST

Focus: INDUSTRIALS

Todd Shaver

Founder and Editor-in-Chief, BullMarket.com

Tesla (TSLA) reported revenue of $3.3 billion this quarter versus $2.3 billion last year. For the full year Tesla did $12 billion versus $7 billion a year ago. EPS this quarter was a loss of $3.04, observes Todd Shaver, growth stock expert and editor of BullMarket.com.

However, the big ramp in profitability is on the horizon. Revenue is expected to jump to $20 billion this year and $27 billion next year. EPS is expected to swing from a loss to a positive $3.25 in 24 months.

The stock traded about flat after the earnings release that included a fractional revenue miss, and narrower-than-consensus EPS loss. Gross margins came in 190 basis points below consensus, with the Model 3 production ramp weighing on the overall margin profile. But that didn’t really matter as management reiterated its target of 5,000 Model 3 production units per week by the end of Q2.

Most continue to see many moving parts to the Tesla story, with the guidance for sustainable positive operating profits sometime in 2018 garnering more of a show-me attitude, especially given the checkered track record of not hitting guidance milestones or production targets.


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However, most agree the healthy demand for the Model 3 continues to be a good problem to have, and are spectators on the pace of production execution.

We put a sell price of $335 on the stock a few weeks ago so we don’t lose the tremendous profits we have on the stock, but the market this week smashed most stocks down including Tesla. Our sell prices are for you to decide what to do.

We love the concept of the company. We love Elon Musk (Space X with its new successful launch this week has had positive ramifications on Tesla). We love the cars they make.

But the debt is crushing. On the other hand, they have been able to weather the storm through debt and equity sales.

Bottom line, this stock could go to $200 or $500. And we’re not sure which will come first? It is very speculative. Should you be in this stock for the wild ride ahead? Only you can decide.

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