Well, no sooner do I say that and we already have Morgan Stanley agreeing with me and reevaluating everything about their Tesla models. This is just the beginning folks.
""Morgan Stanley analyst Adam Jones & team thinks Tesla Motors Inc
is pushing the “insane button” on its capex, according to a new research note today.
Following Wednesday’s earnings, the Morgan Stanley analysts are going back to the two fundamentals of Econ 101 – demand and supply. Specifically, the analysts ask themselves how strong demand is and whether Tesla is in a position to supply current and future demand in a cost-efficient manner"
This quarter's results have reminded everyone just how hard it is to be profitable selling a bleeding edge tech such as an electric car inspite of the high sales prices. I bet this is a rude awakening to those who were already worried about how results will be if the Model 3 comes out with less than half the sales price of a Model S.
There will be zero margin for error then and unless battery costs truly plummet starting right now, the future rosy picture of Tesla earning mountains of profits is going to be replaced with the realistic picture of barely having enough cash flows to keep the business running much less earn any profit.
Not sure what marketcap you place on a company who stays alive but has very bleak profit prospects, but I'm pretty sure the current mkcap is based on Tesla growing and succeeding wildly in both revenues and profits. It's a high flyer with a ton of expectation priced into the stock. I think this quarter may be the quarter when those hopeful expectations move to a more realistic outcome and properly account for the massive execution risk that Tesla faces.