Eight Years After Going Public, Analysts Now Expect Tesla to Make Profits

Speaking to reporters, Jamie Albertine, an automotive analyst, shared that he expects Tesla to start making profits as early as this annum. During a CNBC sitdown of the “Power Lunch” show, Albertine mentioned that he believes that Tesla’s heightened production trajectory is likely to see them turn profits. In the next two quarters, he foresees them testing the price target between $385 and $389.

Even with the impressive stock prices, the company has always struggled to find a comfortable yearly footing. In 2017, the company lost about $2 billion and another $3.4 billion in cash following capital investments. Albertine opined that investors seem to like the CEO, Elon Musk, because he’s regarded as an inventor. That paired with the fact that Tesla is the most in-demand auto manufacturer on Earth means that their faith in the company is steadfast.

Tesla recently celebrated 8 years as a public company last Friday. In that time, its stock prices have experienced a 2,000 percent increment. The company is said to have the highest number of reservations for a vehicle in the world

Global Equities Research managing director, Trip Chowdhry, mentioned that he expects Tesla’s revenues this annum to surpass the $20 billion mark. Chowdhry cited that he arrived at this figure after seeing the rapid uptake in Telas models. He expressed his surprise at the numerous individuals who were buying Model 3’s without ever test driving them. He said that this was an almost unheard of phenomenon, not just in the auto industry, but anywhere else.

Chowdhry added that most people are reluctant to part with $50,000 without first having a feel of the product. Incredibly, the $20 billion in revenues was reached without the company ever having to advertise itself in the public space. Because of all these contributing factors, he believes that Tesla is unrivaled in terms of business performance.

Forging Ahead

Albertine expects Tesla to make forays into the Asian market through China

With all the forward momentum the company has been facing, one would be forgiven to think that Tesla has not had its fair share of obstacles. The company is in dire need of more factories and larger product lines. Gordon Johson, a Wall Street analyst made a point to caution investors on “Closing Bell” not to be overly enthused by a man, instead, he referenced that there was an inherent need to first review the numbers before coming to a decision.

Johson shared that Tesla had not been handling its finances in the best way possible. He pointed out the fact that Tesla burned about $3.4 billion in 2017 and about $1 billion dollars in the last quarter. With that in mind, he pointed out that he was not so hot on Tesla’s futures. He also shared that he found the whole discussion on Tesla’s future as ridiculous. This is because most investors were simply in love with the novel idea of a brilliant inventor, without much regard to the math.

Numbers

Despite the criticism, Tesla is set to produce about 5,000 Model 3’s before the second quarter is over. Earlier on, news reports indicated that the company was not producing enough Model 3’s to meet their targets

Albertine, who doubles up as Consumer Edge’s managing partner, shared that his financial research ventures have led him to conclude that Tesla was not out of the woods yet. For them to be feasible, he expects them to meet their targets before the end of the second quarter. If they don’t, he expects them to have a lot of issues in-house before more details emerge about the state of the second-quarter data in early August.

All the same, Albertine is of the opinion that if Tesla can show that they are profitable with 5,000 units per week, then there will be no need for Musk to hit the panic button. At present, he expects the next couple of quarters to be quite revealing. Notably, Tesla’s contemporaries in the tech scene, Amazon, Twitter, Yelp and Netflix took ages before they recorded profitability following their IPO’s.