This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Tesla Investors Frustrated With Expansion, Gigafactory, But Still Holding:

NEW YORK (TheStreet) -- Tesla's (TSLA - Get Report) stock took off last year like an electric car going 0 to 60. But, as the attitude has changed towards so-called "story stocks," investors on are debating jumping out of Tesla's passenger seat.

$ARIA. $TSLA. "Hope" is not an investment strategy. In this market, an "OK" ER doesn't cut it. Staying with Tesla 4 now, but on close watch.

? StayModest (@StayModest) May. 9 at 09:57 AM

Investors are no longer dazzled by Tesla CEO Elon Musk's vision in which the masses drive affordable electric cars and power their homes with solar energy, potentially stored in batteries manufactured at Tesla's Gigafactory. They want to see profits that put Tesla on a roadmap to justifying its $22 billion market cap.

And investors didn't see those justifications during Tesla's earnings conference call Wednesday evening. The stock fell 11% Thursday -- and wavered between red and green for much of Friday morning?after Tesla management warned that the company would be "slightly free cash flow negative" in 2014 as Tesla continues to invest in "aggressive expansion plans."

$TSLA jump ship?

? Imtiaz (@Imtiaz) May. 9 at 10:47 AM

Tesla has fallen about 33% from its all-time-high, hit back in March. Bad news can't be blamed. The company met first quarter EPS estimates of $0.12 and beat consensus revenue expectations by more than $13 million, according to stats on the Analyst Ratings Network. And Tesla is still receiving more orders for cars than it can fill. In North America, orders were up 10% but deliveries were down due to more cars being delivered to Europe.

But the finger for Tesla's recent stock declines can be pointed at risk acceptance. In the past month, investors have shed "momentum" stocks with high growth multiples, such as Twitter (TWTR) and LinkedIn (LNKD) for more established companies and defensive plays, such as energy stocks.

$TSLA is looking bearish because im feeling bearish. 175, 165, bear, fear, short, doesnt look good, worried.

? D bedrosian (@daytradingshrink) May. 9 at 10:53 AM

Blame could also be laid, at least a little, on the doorstep of the soon-to-be built Gigafactory. When Musk initially discussed the battery plant, intended to drive down battery pack costs to help make electric cars more affordable -- he promised multiple partners. But, so far, Panasonic is the only major partner ever mentioned. Musk also hinted that the Gigafactory could produce battery cells that store solar power from roof panels for use at night. However, so far, there haven't been any announcements that a power company is coming to the table to help build the $5 billion factory.

On the conference call Wednesday, Musk cautioned that it is still "early days" with the Gigafactory. He said that he is in talks with most major utility companies about the long-term demand for energy storage from alternative sources, such as solar panels.

Investors have also been disappointed about the pace of Tesla's expansion in China. Musk said that he expects China to become Tesla's biggest market, given that the world's second largest economy is already the biggest market for cars and premium sedans. But the company still has to roll out service centers and supercharger stations in the China before sales can really take off. Until then, many Chinese consumers order the car and wait.

$TSLA you can't fake it with false China hopes here like TC does with $AAPL

? Terry Spookeson (@spookytrades) May. 8 at 03:01 PM

Musk said he told his China team to "spend money as fast as they can spend it without wasting it" in order to roll out more service centers and deliver more cars in China. Some investors hear such confidence and feel certain that Musk & Co. can deliver on all their objectives. They said Friday that the bottom is in for Tesla and called for the stock to hit $185 or higher.

$TSLA looks to me like the bottom is in... now lets see that $185

? Harald Glatt (@hachre) May. 9 at 11:18 AM

$TSLA bears will get toasted here just wait and watch for more announcement abt giga factory, by the way china orders are already doubled!

? Nik hugh (@Championinvestor) Mar. 7 at 04:02 PM

Before the bulls argument when Tesla declined was often buy the dip. In past month, it was protect against declines. Now its hold on for the ride.

@BeckyHiu I'm long $TSLA but I was happy to sell my puts at profit on that last dip. I'm not chasing it down any further.

? Rish (@androsForm) May. 9 at 11:16 AM

At the time of publication the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
TSLA $233.28 -3.50%
AAPL $94.03 0.42%
FB $117.85 -0.61%
GOOG $695.73 -0.36%
YHOO $36.04 -1.30%


Chart of I:DJI
DOW 17,698.80 -192.36 -1.08%
S&P 500 2,058.67 -22.76 -1.09%
NASDAQ 4,759.78 -57.8140 -1.20%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs