NEW YORK (TheStreet) -- Tesla's (TSLA) 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 StockTwits.com are debating jumping out of Tesla's passenger seat.
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.
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 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.
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.