Investor's Corner
Elon Musk hints at Tesla’s profitable Q4, Mid Range Model 3’s int’l release
Tesla stock (NASDAQ:TSLA) is down on early Friday trading amidst news of the company’s new round of layoffs, as well as the impending production ramp of the $35,000 Standard Range Model 3. The rationale behind the 7% job cuts was extensively explained by Elon Musk in an email to Tesla employees, which was shared on the company’s blog.
Musk acknowledged the challenges that Tesla is currently facing, particularly as the company is now setting the stage for the impending release of the Model 3’s most aggressively-priced variant. In his message, Musk noted that in the near future, Tesla’s challenge would lie in developing vehicles and energy products that are attainable for mainstream customers.
“Looking ahead at our mission of accelerating the advent of sustainable transport and energy, which is important for all life on Earth, we face an extremely difficult challenge: making our cars, batteries and solar products cost-competitive with fossil fuels. While we have made great progress, our products are still too expensive for most people,” Musk wrote.
Perhaps most notable in the letter, though, is Musk’s discussion about Tesla’s capability to make a profit. The Tesla CEO noted that he considers Q3 2018’s 4% profit to be the most meaningful in the company’s 15 years of existence. Musk pointed out, though, that the third quarter’s profit was partly the result of a strong push to sell higher-priced variants of the vehicle — the Long Range Model 3 AWD and the Model 3 Performance — to customers in North America. As for Q4 2018, Musk stated that there is a good chance Tesla would be able to make a profit as well, though not in the same level as the third quarter.
“In Q4, preliminary, unaudited results indicate that we again made a GAAP profit, but less than Q3,” Musk wrote.
To help the company maintain profitability, Tesla is adopting Q3 2018’s strategy this quarter, with the electric car maker pushing the Model 3 Performance and the Long Range Model 3 AWD to customers in Europe and China. Musk also stated that Tesla is aiming to deliver “at least the Mid Range Model 3 variant in all markets” starting around May, in order to reach a greater demographic for the electric sedan. Such a system would likely serve Tesla well, at least until the company could start producing the Standard Range Model 3, which starts at the ever-elusive price of $35,000.
In a statement to CNBC, Wedbush analyst Dan Ives notes that Tesla’s international Model 3 push would likely determine the company’s success in the first half of 2019. In the second half, though, Ives stated that Tesla would need to start producing more affordable versions of the electric sedan for the international market.
“If you think about the trajectory, the first half of 2019 is really Europe coming onboard. But then, ultimately, in the second half, you need the mid-range Model 3 to really start to kick in,” he said.
Tesla’s Model 3 ramp might have already reached a level where the company is able to distribute the vehicle to other countries, but the electric car maker is only about halfway done. Tesla eventually aims to produce 10,000 Model 3 per week, to meet the expected demand for the vehicle in the international market. To accomplish this, Tesla continues to optimize its production capabilities in Fremont, while accelerating the construction of Gigafactory 3 in China. The latter is expected to complete initial construction by the end of summer, with the facility manufacturing the first China-made, “affordable” Model 3 by the end of the year.
Elon Musk’s recent letter to Tesla employees can be accessed here.
As of writing, Tesla stock is trading down 8.78% at $316.81 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Tesla bear Michael Burry got blunt with his beliefs over the company’s valuation, which he called “ridiculously overvalued” in a newsletter to subscribers this past weekend.
“Tesla’s market capitalization is ridiculously overvalued today and has been for a good long time,” Burry, who was the inspiration for the movie The Big Short, and was portrayed by Christian Bale.
Burry went on to say, “As an aside, the Elon cult was all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now is all-in on robots — until competition shows up.”
Tesla bear Michael Burry ditches bet against $TSLA, says ‘media inflated’ the situation
For a long time, Burry has been skeptical of Tesla, its stock, and its CEO, Elon Musk, even placing a $530 million bet against shares several years ago. Eventually, Burry’s short position extended to other supporters of the company, including ARK Invest.
Tesla has long drawn skepticism from investors and more traditional analysts, who believe its valuation is overblown. However, the company is not traded as a traditional stock, something that other Wall Street firms have recognized.
While many believe the company has some serious pull as an automaker, an identity that helped it reach the valuation it has, Tesla has more than transformed into a robotics, AI, and self-driving play, pulling itself into the realm of some of the most recognizable stocks in tech.
Burry’s Scion Asset Management has put its money where its mouth is against Tesla stock on several occasions, but the firm has not yielded positive results, as shares have increased in value since 2020 by over 115 percent. The firm closed in May.
In 2020, it launched its short position, but by October 2021, it had ditched that position.
Tesla has had a tumultuous year on Wall Street, dipping significantly to around the $220 mark at one point. However, it rebounded significantly in September, climbing back up to the $400 region, as it currently trades at around $430.
It closed at $430.14 on Monday.
Investor's Corner
Mizuho keeps Tesla (TSLA) “Outperform” rating but lowers price target
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected.
Mizuho analyst Vijay Rakesh lowered Tesla’s (NASDAQ:TSLA) price target to $475 from $485, citing potential 2026 EV subsidy cuts in the U.S. and China that could pressure deliveries. The firm maintained its Outperform rating for the electric vehicle maker, however.
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected. The U.S. accounted for roughly 37% of Tesla’s third-quarter 2025 sales, while China represented about 34%, making both markets highly sensitive to policy shifts. Potential 50% cuts to Chinese subsidies and reduced U.S. incentives affected the firm’s outlook.
With those pressures factored in, the firm now expects Tesla to deliver 1.75 million vehicles in 2026 and 2 million in 2027, slightly below consensus estimates of 1.82 million and 2.15 million, respectively. The analyst was cautiously optimistic, as near-term pressure from subsidies is there, but the company’s long-term tech roadmap remains very compelling.
Despite the revised target, Mizuho remained optimistic on Tesla’s long-term technology roadmap. The firm highlighted three major growth drivers into 2027: the broader adoption of Full Self-Driving V14, the expansion of Tesla’s Robotaxi service, and the commercialization of Optimus, the company’s humanoid robot.
“We are lowering TSLA Ests/PT to $475 with Potential BEV headwinds in 2026E. We believe into 2026E, US (~37% of TSLA 3Q25 sales) EV subsidy cuts and China (34% of TSLA 3Q25 sales) potential 50% EV subsidy cuts could be a headwind to EV deliveries.
“We are now estimating TSLA deliveries for 2026/27E at 1.75M/2.00M (slightly below cons. 1.82M/2.15M). We see some LT drivers with FSD v14 adoption for autonomous, robotaxi launches, and humanoid robots into 2027 driving strength,” the analyst noted.
Tesla stock (NASDAQ: TSLA) has landed an elusive “must own” status from Wall Street firm Melius, according to a new note released early this week.
Analyst Rob Wertheimer said Tesla will lead the charge in world-changing tech, given the company’s focus on self-driving, autonomy, and Robotaxi. In a note to investors, Wertheimer said “the world is about to change, dramatically,” because of the advent of self-driving cars.
He looks at the industry and sees many potential players, but the firm says there will only be one true winner:
“Our point is not that Tesla is at risk, it’s that everybody else is.”
The major argument is that autonomy is nearing a tipping point where years of chipping away at the software and data needed to develop a sound, safe, and effective form of autonomous driving technology turn into an avalanche of progress.
Wertheimer believes autonomy is a $7 trillion sector,” and in the coming years, investors will see “hundreds of billions in value shift to Tesla.”
A lot of the major growth has to do with the all-too-common “butts in seats” strategy, as Wertheimer believes that only a fraction of people in the United States have ridden in a self-driving car. In Tesla’s regard, only “tens of thousands” have tried Tesla’s latest Full Self-Driving (Supervised) version, which is v14.
Tesla Full Self-Driving v14.2 – Full Review, the Good and the Bad
When it reaches a widespread rollout and more people are able to experience Tesla Full Self-Driving v14, he believes “it will shock most people.”
Citing things like Tesla’s massive data pool from its vehicles, as well as its shift to end-to-end neural nets in 2021 and 2022, as well as the upcoming AI5 chip, which will be put into a handful of vehicles next year, but will reach a wider rollout in 2027, Melius believes many investors are not aware of the pace of advancement in self-driving.
Tesla’s lead in its self-driving efforts is expanding, Wertheimer says. The company is making strategic choices on everything from hardware to software, manufacturing, and overall vehicle design. He says Tesla has left legacy automakers struggling to keep pace as they still rely on outdated architectures and fragmented supplier systems.
Tesla shares are up over 6 percent at 10:40 a.m. on the East Coast, trading at around $416.
Tesla FSD (Supervised) blows away French journalist after test ride
Tesla Optimus shows off its newest capability as progress accelerates
