The long-awaited launch of the Model 3 from Electric Vehicle (EV) company Tesla Inc. (NASDAQ:TSLA), a launch which the company was able to achieve on time (though not necessarily on budget), has investors pondering the potential trajectory of TSLA stock over the coming quarters as Tesla’s management team works to churn out as many cars as possible to meet a backlog for its Model 3 cars which continues to grow.
The Model 3 is expected to boost the EV company’s image as a mass market auto manufacturer from a lithium ion battery company, leading the charge forward for electric vehicles as a viable alternative to traditional gasoline or diesel engines. With most other major global auto manufacturers following suit with the release of their own version of a mass market electric vehicle, the question is now not whether Tesla can produce a mass market car that everyone will want (evidenced by their impressive order backlog), but how quickly the company will be able to produce these cars, and at what profit margin.
The question of when Tesla might become profitable is a difficult one to answer, and one which analysts tend to disagree on. With Tesla announcing another $1.5-billion junk bond raise, the question of how long Tesla can go on losing money appears to be a question of how long investors will continue to offer their money for Tesla stock or debt. For the conservative investor, however, it may make sense to look elsewhere for value at this valuation.
Invest wisely, my friends.
