After spiking to an all-time high of nearly $390 in mid-September, the share price of one of the most sought-after companies in the technology space, Tesla Inc. (NASDAQ:TSLA), has dipped more than 8% as the company has failed to meet its guidance for number of deliveries of its new Model 3 vehicle.
Production issues and an inability to meet consumer demand (or forecasted production levels) has resulted in a small measure of investor complacency for the high-flying auto manufacturer and technology giant. The company’s balance sheet, while stable, has also presented a headwind for the company – both in the ability of Tesla to raise debt at reasonable levels (recently had to issue junk bonds at a high rate of interest), as well as the future projected return on equity and return on investment numbers investors can expect over the long-run.
Tesla remains the leader in electric vehicle innovation, leading to the large premium its shares demand in the open market. That said, competitors including all of the major auto makers in the country, have expanded their efforts in this arena, leading to a debate among intellectuals as to what Tesla’s future holds in this sector which continues to grow.
The growth argument for Tesla remains strong, however a number of less-than-optimistic indicators have led many bears, including myself, to warn potential investors from loading up on this name, given the current premium which is both unsustainable and dangerous for long-term investors.
Invest wisely, my friends.
Tech Insider
