Within first two months of 2016, Tesla Motors Inc (NASDAQ:TSLA) shares have gone down 30%, which tells an important part of what the auto manufacturer is going through as of now. Tesla is readying to report earnings for the recently concluded quarter, but investors and many automotive analysts are waiting for it to disclose the guidance for the rest of the year.
What Went Wrong For Tesla
Tesla, being one of the most futuristic automotive players in the world, is expected to make huge revenue year after year, but this is not the case. According to most of the experts, company’s long-term approach has hurt investors’ sentiments more than anything else. So far its shares have gone down 30% and the way things are moving at the moment, it looks like they will depreciate further.
In the opinion of Stifel analysts, when the market’s doing good, everyone wants to play long; otherwise, all investors remember is what the company has done lately. Once upon a time, Linked In was trading 80 times higher than its earnings; and everyone knows what’s the current state of its shares. In Tesla’s case, Model X crossover was expected to hit the market in 3Q2015, but delays in production and other issues prolonged the launch up till December 2015.
Earlier Tesla had given a yearly guidance of selling 80-85K units in 2016; however, the way things have moved lately, this guidance may be revised. If that happens, chances are Tesla might face further sell-off in the market. Even though Tesla’s taking longer than expected time to ensure premium quality, but disheartened investors don’t understand this fact.
Tesla aims to sell 500,000 vehicles a year by 2020; however, that figure seems farther than Tesla and Elon Musk think. Last year, the automaker sold 50,580 units, and it has given a guidance of 80,000 units this year. If Tesla fails to meet this target, investors will surely question its potential to sell 500,000 units/year by 2020. It will be great to see how Musk defends Tesla at the earnings call.