It’s the question that puzzles pundits and makes short-sellers see red: Why isn’t Tesla broke yet? The company has posted losses almost every quarter since its founding, but not only does it remain in business, it steadily rolls out new products and opens up new markets, as Tesla fanboys cheer and the stock (over the long term) has soared.
Many have sought an answer to this consequential question – the latest is the Youtube channel The Rest of Us, in a charmingly childlike animated video that explains Tesla’s unique financial model in the simplest of terms.
Above: Exploring the financials at Tesla (Youtube: The Rest of Us)
In short, Tesla isn’t broke because it isn’t running out of cash. Theoretically, losses can continue indefinitely, as long as the kitty is regularly replenished. But where does the cash come from? Some comes from the sale of vehicles – Tesla earns a healthy margin on each car it sells (despite the disingenuous claims of some naysayers), and it sometimes even gets cash in the form of deposits before it even builds a vehicle (a clever financial feat that’s the envy of other automakers).
However, even as Tesla rakes in piles of money from product sales, it shovels out much more. Whence cometh the cash to top up Tesla’s reserves? Some is borrowed (debt financing), but more comes from the stock market (equity financing). Why do investors keep buying shares in a company that perennially loses money? Because savvy investors don’t base their decisions on what a company is doing today, but on its prospects for the future. Tesla is focused on the future like no other automaker, and has steadily invested huge sums to prepare for a future in which it sees huge opportunities.
Many articles about Tesla and other high-flying tech companies use terms such as “burn rate,” which can give the false impression that the cash that’s coming in just disappears, frittered away, heedlessly tossed to the winds, flushed down the…you get the idea.
Back in 2016, Vincent Paver, writing in Medium, made some good points as he explained that, far from throwing its cash in the fireplace, Tesla has invested much of it in capital goods – handy things like factories, machine tools, robots and charging facilities. Paver points out that, at the time of writing, Tesla had “burned” $1.6 billion over the last 12 months, but the book value of its equipment had increased by $2.8 billion over the same period. Other expenditures, such as vehicle development costs and employee training, may not result in tangible bricks-and-mortar assets, but they are also investments, as they allow Tesla to create new products that it can sell for more lovely cash.
Paver concludes that what we have here is not a company that is recklessly flinging away money, but one that is “in a capital-intensive business, and is [investing] substantial but appropriate sums of money on equipment and capacity expansion, tied directly to strong end user demand.”
And there you have the real key to why the callow California carmaker hasn’t gone belly-up, and won’t if current trends continue. The demand for Tesla’s products is strong – the backlog of Model 3 orders remains huge, and Models S and X continue to sell at a steady pace. Yes, not being able to produce vehicles fast enough to meet demand is a problem, but the reverse would be much worse. If Tesla’s waiting list disappears, and sales figures start going down, then it will truly be time to worry about the company’s cash flow.
Paver calls Tesla “a rare example of a public company aggressively chasing a market opportunity many multiples greater than its current scale.” Elon Musk’s new compensation plan, which was recently approved by shareholders, envisions the automaker growing to a market cap of $650 billion, which would make Tesla one of the five largest companies in the US. If and when that happens, rest assured that plenty more cash will be burned along the way.
===
Note: Article originally published on evannex.com by Charles Morris
Tesla stock (NASDAQ: TSLA) just got a price target boost from its biggest bear, Gordon Johnson of GLJ Research, who raised his expected trading level to one that is 95 percent lower than its current trading level.
Johnson pushed his Tesla price target from $19.05 to $25.28 on Wednesday, while maintaining the ‘Sell’ rating that has been present on the stock for a long time. GLJ has largely been recognized as the biggest skeptic of Elon Musk’s company, being particularly critical of the automotive side of things.
Tesla has routinely been called out by Johnson for negative delivery growth, what he calls “weakening demand,” and price cuts that have occurred in past years, all pointing to them as desperate measures to sell its cars.
Johnson has also said that Tesla is extremely overvalued and is too reliant on regulatory credits for profitability. Other analysts on the bullish side recognize Tesla as a company that is bigger than just its automotive side.
Many believe it is a leader in autonomous driving, like Dan Ives of Wedbush, who believes Tesla will have a widely successful 2026, especially if it can come through on its targets and schedules for Robotaxi and Cybercab.
Justifying the price target this week, Johnson said that the revised valuation is based on “reality rather than narrative.” Tesla has been noted by other analysts and financial experts as a stock that trades on narrative, something Johnson obviously disagrees with.
Dan Nathan, a notorious skeptic of the stock, turned bullish late last year, recognizing the company’s shares trade on “technicals and sentiment.” He said, “From a trading perspective, it looks very interesting.”
Tesla bear turns bullish for two reasons as stock continues boost
Johnson has remained very consistent with this sentiment regarding Tesla and his beliefs regarding its true valuation, and has never shied away from putting his true thoughts out there.
Tesla shares closed at $431.40 today, about 95 percent above where Johnson’s new price target lies.
Tesla (NASDAQ: TSLA) stock received a price target update from Pierre Ferragu of Wall Street firm New Street Research, citing the company’s growing lead in self-driving and autonomy.
On Tuesday, Ferragu bumped his price target from $520 to $600, stating that the consensus from the Consumer Electronics Show in Las Vegas was that Tesla’s lead in autonomy has been sustained, is growing, and sits at a multiple-year lead over its competitors.
CES 2026 validates Tesla’s FSD strategy, but there’s a big lag for rivals: analyst
“The signal from Vegas is loud and clear,” the analyst writes. “The industry isn’t catching up to Tesla; it is actively validating Tesla’s strategy…just with a 12-year lag.”
The note shows that the company’s prowess in vehicle autonomy is being solidified by lagging competitors that claim to have the best method. The only problem is that Tesla’s Vision-based approach, which it adopted back in 2022 with the Model 3 and Model Y initially, has been proven to be more effective than competitors’ approach, which utilizes other technology, such as LiDAR and sensors.
Currently, Tesla shares are sitting at around $433, as the company’s stock price closed at $432.96 on Tuesday afternoon.
Ferragu’s consensus on Tesla shares echoes that of other Wall Street analysts who are bullish on the company’s stock and position within the AI, autonomy, and robotics sector.
Dan Ives of Wedbush wrote in a note in mid-December that he anticipates Tesla having a massive 2026, and could reach a $3 trillion valuation this year, especially with the “AI chapter” taking hold of the narrative at the company.
Ives also said that the big step in the right direction for Tesla will be initiating production of the Cybercab, as well as expanding on the Robotaxi program through the next 12 months:
“…as full-scale volume production begins with the autonomous and robotics roadmap…The company has started to test the all-important Cybercab in Austin over the past few weeks, which is an incremental step towards launching in 2026 with important volume production of Cybercabs starting in April/May, which remains the golden goose in unlocking TSLA’s AI valuation.”
Tesla analyst breaks down delivery report: ‘A step in the right direction’
Tesla has transitioned from an automaker to a full-fledged AI company, and its Robotaxi and Cybercab programs, fueled by the Full Self-Driving suite, are leading the charge moving forward. In 2026, there are major goals the company has outlined. The first is removing Safety Drivers from vehicles in Austin, Texas, one of the areas where it operates a ride-hailing service within the U.S.
Ultimately, Tesla will aim to launch a Level 5 autonomy suite to the public in the coming years.
Investor's Corner
Tesla Q4 delivery numbers are better than they initially look: analyst
The Deepwater Asset Management Managing Partner shared his thoughts in a post on his website.
Longtime Tesla analyst and Deepwater Asset Management Managing Partner Gene Munster has shared his insights on Tesla’s Q4 2025 deliveries. As per the analyst, Tesla’s numbers are actually better than they first appear.
Munster shared his thoughts in a post on his website.
Normalized December Deliveries
Munster noted that Tesla delivered 418k vehicles in the fourth quarter of 2025, slightly below Street expectations of 420k but above the whisper number of 415k. Tesla’s reported 16% year-over-year decline, compared to +7% in September, is largely distorted by the timing of the tax credit expiration, which pulled forward demand.
“Taking a step back, we believe September deliveries pulled forward approximately 55k units that would have otherwise occurred in December or March. For simplicity, we assume the entire pull-forward impacted the December quarter. Under this assumption, September growth would have been down ~5% absent the 55k pull-forward, a Deepwater estimate tied to the credit’s expiration.
“For December deliveries to have declined ~5% year over year would imply total deliveries of roughly 470k. Subtracting the 55k units pulled into September results in an implied December delivery figure of approximately 415k. The reported 418k suggests that, when normalizing for the tax credit timing, quarter-over-quarter growth has been consistently down ~5%. Importantly, this ~5% decline represents an improvement from the ~13% declines seen in both the March and June 2025 quarters.“
Tesla’s United States market share
Munster also estimated that Q4 as a whole might very well show a notable improvement in Tesla’s market share in the United States.
“Over the past couple of years, based on data from Cox Automotive, Tesla has been losing U.S. EV market share, declining to just under 50%. Based on data for October and November, Cox estimates that total U.S. EV sales were down approximately 35%, compared to Tesla’s just reported down 16% for the full quarter. For the first two months of the quarter, Cox reported Tesla market share of roughly a 65% share, up from under 50% in the September quarter.
“While this data excludes December, the quarter as a whole is likely to show a material improvement in Tesla’s U.S. EV market share.“
Tesla AI Head says future FSD feature has already partially shipped
Tesla’s Elon Musk: 10 billion miles needed for safe Unsupervised FSD
