The end of the third quarter is drawing nearer, and Tesla is going full throttle in its efforts to achieve its ambitious self-imposed goals, including the production of 50,000-55,000 Model 3 and attaining profitability. As Tesla adopts out-of-the-box solutions to deliver as many vehicles as it can to reservation holders, the company also seems poised to get an end-of-quarter boost with the impending rollout of Software Version 9.
To say that Tesla stock (NASDAQ:TSLA) exhibited a lot of volatility over the past few months is an understatement. Since the start of the third quarter, Tesla shares traded as high as $387.46 and as low as $252.25. While Tesla stock has always been volatile, some of its wild swings this Q3 were actually augmented by Elon Musk’s actions. Earlier this month, for example, news of former CAO Dave Morton and ex-Chief People Officer Gabrielle Toledano’s departure from the company ended were augmented by reports of Musk’s behavior during a podcast with comedian Joe Rogan, where he seemingly puffed cannabis on air. On that day, Tesla stock dropped more than 5%, closing at $263.24 per share.
Amidst the drama that surrounded Tesla this quarter, such as its short-lived go-private initiative, as well as reservations about Elon Musk’s capability to lead the company, some Wall Street analysts such as Baird’s Ben Kallo have noted that the electric car maker’s fundamentals, particularly those directly connected to the ongoing Model 3 ramp, are encouraging nonetheless. Even some of the company’s longtime critics such as Goldman Sachs’ David Tamberrino recently stated that Tesla would likely meet its target of producing and delivering more than 50,000 Model 3 in the third quarter.
If Tesla does meet its Q3 production and delivery targets for its electric cars, the company can take a huge step forward towards profitability. Over the past months, Elon Musk has boldly stated that he expects Tesla to start showing a profit in the second half of 2018. Musk emphasized this in the company’s Q2 earnings call, when he noted that he “really want(s) to emphasize (Tesla’s) goal to be profitable and cash-flow positive for every quarter, going forward.” Tesla’s ongoing end-of-quarter delivery blitz, which has so far involved out-of-the-box strategies, including a program involving volunteer owners helping in vehicle handovers, and Tesla building its own car carriers to address bottlenecks in the transportation of cars from the Fremont factory to delivery centers across the United States.
At this point, it appears safe to assume that Tesla would likely meet its production and delivery targets for Q3. Updates about the Model 3 ramp would probably be optimistic as well. Considering Tesla’s self-imposed goals, Elon Musk’s announcements, and the company’s ongoing delivery initiatives, it appears that the electric car maker’s gameplan for Q3 is coming together. But this might not be all.
On Tuesday, Elon Musk announced that Software Version 9, a highly-anticipated update expected to include the first features of Tesla’s Full Self-Driving suite, will likely see a wide rollout at the end of the week. Not long after Musk’s post, owners who are members of Tesla’s early access program received Version 9, and based on screenshots of the revamped firmware, it appears that the update would include improvements and several new functionalities. It remains to be seen if Software V9 lives up to the hype, but if it gets well-received by Tesla’s consumer base, the company could end up adding one more item to its list of accomplishments for Q3.
Tesla is arguably one of the most emotional stocks in the market, attracting an equal number of passionate supporters and aggressive critics. As exhibited in the past few months, TSLA stock has a tendency to react on investors’ sentiment, to the point where Elon Musk’s questionable online actions affect the movement of the company’s shares. In this sense, every optimistic update from the company in these final days of Q3 would probably help determine TSLA’s trend in the coming weeks. Tesla’s end-of-Q3 play has so far involved a big push to deliver as many vehicles as possible. Augmented by Software Version 9’s release, Q3 2018 could be Tesla’s most impressive quarter yet.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.