Tesla Investors Focus on Liquidity, Ignore Model 3 Production Miss

Tesla Investors Focus on Liquidity, Ignore Model 3 Production Miss

Tesla Investors Focus on Liquidity, Ignore Model 3 Production Miss

Tesla has admitted that trying to improve Model 3 production required moving resources off the luxury Model S and Model X assembly lines. The company has been infamously slow to deliver on the many pre-orders for its models; between Elon Musk's promises and the reality on the ground often lies a gaping chasm.

Add to that, Musk sleeping at the Tesla Motors' Nevada-based gigafactory, possibly, the company can hope to achieve its target of 5,000 units of Model 3 per week. The story really hinges on the Model 3. Given the average carmaker executive would sell their grandmother for that many cars, the future seemed assured. The company, according to Bloomberg, which has been tacking Model 3's production rate, has been assembling about 1,276 units a week for the last couple of weeks.

Although demand for the Model 3 hasn't really been an issue, production of the Model 3 has proven more hard than Tesla had initially anticipated.

The electric-car maker missed its production targets in the first-quarter.

After assessing Tesla's Q1 production numbers as well as the company's cash burn, Bloomberg's Liam Denning wondered if the shareholders' optimism was justified.

Tesla's milestone of producing 2,020 Model 3 in a week was the result of the company's efforts to ramp-up production during the quarter.

Although the cars may be highly regarded, that doesn't always translate into high regard for the company amongst investment analysts.

Tesla and its larger-than-life CEO Elon Musk are known for aiming high, but Wall Street is growing wiser as even the most bullish analysts are starting to scale back their expectations in light of the automakers recent woes.

Many professional shorts (AKA hedge funds) judge it too risky and stay out of the game, but watch intently, and much of the Tesla share register (the longs) are in the "fanboy" classification.

The outcome of the battle is anyone's guess. In a research note Tuesday, analysts at JPMorgan recommended selling Tesla stock on the earnings upswing, viewing the pop on production progress as a flawless time to lock in profits and get out. However, Tesla said that it was able to increase its weekly production rate from 793 units in the final seven days of 2017 to 2020 units over the last week, as it swiftly addressed production and supply chain bottlenecks over the quarter.

Despite all the production hell and cash flow concerns in the first quarter, Tesla has announced plans to build a new truck and a roadster sports auto, and to build a factory in China.

If you want to add plug-in hybrids into the mix, Model 3 even beats the Toyota Prius Prime, which is now the best-selling plug-in hybrid vehicle in the U.S. with 6,468 units during the first 3 months of the year.

The company built 34,494 vehicles during 2018's first quarter - 9,766 of which were Model 3s.

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