Tesla Motors shares are up 2.9% to $213.59 in trading Tuesday.
Through the first three months of the year, Tesla sold 4,700 cars in the U.S., less than a 1% increase over the same period last year.
Barclays (BCS) analyst Brian Johnson believes that U.S. demand for the electric vehicle maker has peaked.
"We believe that Model S demand in the U.S. has plateaued, leaving international sales to pick up the growth slack. Within International, with seemingly soft European sales outside of Norway, Tesla will be dependent on strong Chinese demand," Johnson said in a report published Tuesday.
"While we expect strong initial interest from early adopters in China, we see challenges to broader luxury market adoption," he added.
Other analysts point to the car's high price point as a reason for stagnating sales.
The Model S has a retail starting price of over $70,000.
Despite these factors, there is market anticipation for the company's yet-to-be-debuted Model X sport utility vehicle. The Model X is expected to be available in 2015.
TheStreet Ratings team rates TESLA MOTORS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TSLA's very impressive revenue growth greatly exceeded the industry average of 4.5%. Since the same quarter one year prior, revenues leaped by 100.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Automobiles industry and the overall market, TESLA MOTORS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TESLA MOTORS INC is currently lower than what is desirable, coming in at 31.56%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, TSLA's net profit margin of -2.64% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: TSLA Ratings Report