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Tesla stock (TSLA) splits Wall St. as analysts weigh in on Model 3 sustainability

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Tesla stock (NASDAQ:TSLA) has been characteristically volatile, to the point where CEO Elon Musk boldly declared during the company’s Q1 2018 earnings call that people who fear volatility should not invest in the company. With Tesla recently announcing the date of its Q2 2018 financial results and earnings call, the electric car maker is once more dividing Wall Street down the middle, with bulls and bears both reiterating their stance on the company’s performance.

Mott Capital Management LLC founder Michael Kramer recently noted that Tesla’s investors should prepare themselves for a wild ride, as his firm expects the company’s shares to rise or fall by as much as 17% over the next two months. According to Kramer, Tesla stock would likely trade anywhere between $265 to $375 over the next ~65 days. The Mott Capital founder also estimates that Tesla’s September options would likely see a lot of implied volatility on September, at roughly 50% — almost five times greater than the S&P 500’s implied volatility of 10%.

A key factor that would determine Tesla’s performance in the stock market for the next few months would be the Model 3 — a vehicle that Elon Musk aptly dubbed as a “bet-the-company” project. With Tesla attaining its Q2 2018 production target of manufacturing 5,000 Model 3 per week by the end of June, the electric car maker appears to be suggesting that its self-imposed “production hell” is about to end.

In a recent note, Argus Research analyst Bill Selesky backed the firm’s Buy rating for Tesla, placing a price target of $444 (a +36% upside potential) for the company’s stock. According to Selesky, Argus’ positive stance stands on an optimistic outlook for revenue gains from the Model S and X, as well as strong demand for the Model 3 sedan. The analyst further noted that while Tesla’s production figures for the Model 3 during the first quarter fell below its expectations, Argus believes that the company would show an improvement in the second quarter. Finally, Selesky stated that Model 3 production costs would likely diminish next year, enabling Tesla to achieve a healthy gross margin for the vehicle in late 2019.

“Although first quarter production of the Model 3 fell short of our forecast and management’s guidance, the company recently reached its 5,000 per week production target. As such, we expect significant sequential improvement in the second quarter. We expect the company to achieve its target gross margin of 25% on the Model 3 in late 2019, in line with the margins already achieved on the Model S and Model X,” Selesky wrote.

Needham & Co’s Rajvindra Gill, however, released a note downgrading Tesla to a Sell, citing an uptick in cancellations for Model 3 orders. According to the analyst, Needham’s estimates suggest that Tesla’s refund rate for the Model 3 has outpaced deposits for the electric car.  

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“Based on our checks, refunds are outpacing deposits as cancellations accelerate. The reasons are varied: extended wait times, the expiration of the $7,500 credit, and unavailability of the $35k base model. In August ’17, TSLA cited a refund rate of 12%. Almost a year later, we believe it has doubled and outpaced deposits. Model 3 wait times are currently 4-12 months, and with base model not available until mid-2019, consumers could wait until 2020,” the analyst wrote.

Since the beginning of July, Tesla appears to have gone all-in on the Model 3, pushing the vehicle to buyers through test drive programs and initiatives such as a 5-minute Sign & Drive delivery system. Signs over the past weeks also indicate that Tesla is all but accelerating its Model 3 push for the third quarter, with more than 19,000 new VINs filed so far in July, and a 19% increase in hiring activity since the month started. A vote of confidence for the company’s profitability also came recently from Detroit, after teardown specialist Sandy Munro stated that the Model 3’s Long Range RWD variant could give Tesla a 36% profit. Munro also estimates that the $35,000 base Model 3 could still give the electric car maker a profit of 18%.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Investor's Corner

Tesla Optimus Gen 3 shows off a cleaner, factory-ready design in new app discovery

Renders hidden inside Tesla’s Android app show Optimus Gen 3’s design before any official reveal.

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Tesla Optimus Gen 3 [Credit: Tesla]

Tesla may have accidentally given a first look at its newest Optimus Gen 3 humanoid robot when photos were found in the Tesla smartphone app.

Design files tucked inside a recent Android version of the Tesla app appear to show the third generation humanoid robot next to the older Gen 2.5 prototype. The assets were extracted from the app package by Tesla community member @wholemars, who posted the renders on X late Tuesday night before deleting them. The Tesla Newswire reshared the side by side comparison on Wednesday, and the images have circulated widely since.

Tesla Optimus Gen 2.5 vs Gen 3 comparison via @WholeMars on X

Tesla Optimus Gen 2.5 vs Gen 3 comparison via @WholeMars on X

The files are labeled “gen3” and were built as models for Tesla app’s own interface, as validated directly by Grok to be official.

The comparison shows a robot that looks built for a factory line rather than a lab bench. Gen 2.5’s exposed mechanical linkages and gold plating on the knees and shins are gone. In their place, Gen 3 uses matte black fairings on the lower legs, paired with a more contoured champagne gold body. Flexible covers now seal the joint where the torso meets the upper thighs, keeping bearings and moving parts sealed from debris and unnecessary contact.

The body panels fit more tightly, and the hands, which Tesla has said carry 22 degrees of freedom, look far more refined than those on earlier units.

This most recent leak fills a gap Tesla has left open for most of the year. Elon Musk said on March 31 that Optimus 3 was walking around but needed “some finishing touches” before it could be shown, a delay Teslarati covered when Tesla missed its first quarter reveal target. Musk later said Tesla would hold the design back until closer to production, partly to keep competitors from copying it. No reveal date has been announced.

The app itself has been preparing for Optimus for months. In July, code in the Tesla app pointed to a dedicated robot phone key, a consent screen for collecting video and spatial data while Optimus works inside a home, and an alert system for low battery and mechanical faults. Finished 3D models of Gen 3 suggest the interface owners will eventually use is moving past placeholder code toward something Tesla intends to ship.

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Manufacturing is moving in parallel. Tesla tore out the original Model S and Model X lines at Fremont this summer to make room for Optimus production, with a planned capacity of one million robots a year. At Giga Texas, the steel frame of a dedicated Optimus factory is nearing completion ahead of a targeted 2027 start, with Musk pointing to an eventual output of 10 million units annually.

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X changed how everyone gets paid, and this lawsuit shows why

X sued a Bitcoin account network over fake payouts as its creator pay model shifts

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Elon Musk’s X has taken a Bitcoin-focused engagement ring to court, and the case doubles as a receipt for how differently the platform pays creators today. The company filed suit in the High Court of England and Wales against Vivek Kumar Sen and Zamyang Sherpa, alleging the pair ran six accounts, including @Vivek4real_, @Bitcoin_Teddy and @TrendingBitcoin, as one coordinated operation to fake the kind of engagement that used to translate directly into money.

According to the filing, first reported by Gizmodo, the accounts posted near identical “BREAKING” crypto headlines seconds apart, in one case 11 seconds, then had three more handles like, reply to and repost the material to manufacture what X called “a false appearance of genuine, human communication and interaction.” X says the scheme pulled in at least £207,384, about $278,000, and pegs its own investigation and remediation costs at another £75,000. The accounts were suspended August 18. X general counsel James Burnham announced the case on X last weekend, writing that the company “will act forcefully to protect our platform and the earnings of genuine creators.” Musk’s own reaction, posted shortly after, was three words: “Don’t mess with 𝕏.”

The timing lines up with a a recent update to how X pays its creators. The program these accounts allegedly gamed, Creator Revenue Sharing, launched in mid 2023 and paid out based on how much a post got engaged with. Originality was never part of the formula, which is exactly how the platform ended up flooded with recycled clips, copy pasted “BREAKING” posts and replies engineered purely to farm reactions from paying subscribers.

X tried patching the model more than once, including an April cut to aggregator payouts and a March regional weighting change that Musk personally paused hours after it was announced. X retired Creator Revenue Sharing for good on September 7 and opened its replacement, Original Content Rewards, the next day.

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The new math is stricter. Payouts now come only from qualified impressions, meaning unique Home Timeline views from Premium subscribers where at least half the post is visible, and replies no longer count toward eligibility at all. Copied posts, reuploaded media and reposts without meaningful changes are explicitly excluded. Allegra Jacchia, senior product manager for Creators at SpaceXAI, which now runs X’s product and AI work following xAI’s acquisition of the platform, put it bluntly, saying the goal is to reward creators who bring original ideas and perspective, “not those who have become best at gaming the system.”

Read that way, the lawsuit isn’t really about six crypto accounts. It’s X putting a dollar figure on what the old incentive structure cost, then suing to collect it right as the new one goes live. For live updates on how the case and the new rewards program shake out, follow @Teslarati on X.

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Why automakers keep turning down Elon Musk’s Tesla Full Self-Driving offer

Elon Musk confirms no automaker has ever accepted Tesla’s offer to license Full Self-Driving software.

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Elon Musk gave a brief answer on X Monday that confirmed that Tesla’s standing offer to license Full Self-Driving to other automakers still has zero takers. Sawyer Merritt wrote that “Tesla has for years openly invited other automakers to license FSD. None of them have accepted,” responding to a prediction from Boom Supersonic founder Blake Scholl that Tesla would eventually open FSD the way it opened its Supercharger network to rival brands. Musk’s reply to Merritt was one word: “Exactly.”

It is not the first time Musk has made this point. He said something similar in November, when he called legacy automakers reluctance to adopt FSD “crazy,” and Tesla has floated the offer publicly since at least 2021. Scholl’s prediction touches on something real. Once NACS became the de facto charging standard, adoption from Ford, GM, Rivian and others followed within about a year. FSD licensing was supposed to work the same way once Tesla built enough of a lead that switching made sense for everyone.

The case for licensing now is stronger than it was two years ago. Waymo and Zoox are logging hundreds of thousands of unsupervised autonomous miles, along with Tesla’s own Robotaxi fleet. Every automaker still selling driver assist systems that lag FSD has given the robotaxi conversation to Tesla, Waymo and Zoox by default. Licensing FSD would let a GM or a Ford compete on the same field without spending a decade and billions of dollars building a stack from scratch, the same argument Tesla made when it opened the Supercharger network to bring more EVs onto its chargers.

But FSD is not a connector standard. As one reply to Musk’s post pointed out, licensing FSD is not a software license the way NACS was a plug spec. It requires adopting Tesla’s eight camera layout and its onboard compute architecture, meaning a licensee’s cars would effectively become Tesla hardware wearing someone else’s badge. That is the visible obstacle. The less visible one is data. A licensed FSD stack would report back the same telemetry Tesla collects from its own fleet, giving Tesla a continuous read on how a competitor’s cars are actually driven, where they struggle, and how often drivers intervene. For an automaker trying to build its own autonomy program, or simply trying to keep its build quality and safety record private, handing Tesla that visibility could be a bigger cost than the hardware bill. It is the reason the Supercharger comparison only goes so far. Opening a charging plug cost Tesla very little. Opening FSD would cost a rival something it cannot get back.

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