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Tesla will start being profitable by September, says Wall St veteran Gene Munster

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Wall Street analyst Gene Munster from Loup Ventures has issued his expectations for Tesla’s (NASDAQ:TSLA) financial performance this coming quarter, stating that the Elon Musk-led company will start being profitable by September 2018.  

In a statement to CNBC‘s Fast Money, Munster stated that Tesla would probably not be “wildly profitable” by September, but Elon Musk’s 6,000/week target for the Model 3 would move the company’s finances towards positive territories.

“This 5,000 production number was the first time in about nine months he’s gotten one right. I think it’s safe to always dial back what he’s saying, that’s why we think Tesla’s going to meet the production number by the end of the September quarter. If they hit that number, it’s going to equate to 48,000 model 3s produced in the September quarter. That should get them to profitability, slightly profitable. It’s not going to be wildly profitable in September; I just want to warn everyone, but it moves them in the right direction.”

Tesla’s production blitz at the final week of Q2 2018 resulted in the electric car and energy company reaching its all-elusive goal of producing 5,000 Model 3 in a single week. Despite accomplishing its Model 3 targets and exhibiting a 55% growth in production compared to Q2 2017, however, Tesla stock took a nosedive on Monday, ending the day down 2.30% and trading at $335.07.

Part of the reason behind the dip in the company’s stocks were negative reports from some Wall Street analysts including CFRA’s Efraim Levy, who downgraded his rating of Tesla stock from Hold to Sell. The CFRA analyst stated that the company would likely be unable to sustain its production rate for the Model 3. Levy also criticized Tesla’s long-implemented $2,500 deposit for the compact electric car as an “aggressive attempt to meet otherwise difficult targets of being cash flow positive in Q3.”

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Other Wall Street analysts, however, had far different outlooks. Apart from Gene Munster, Guggenheim Securities analyst Rob Cihra released a favorable Q3 forecast for Tesla, reiterating his Buy rating for the company’s stocks. According to Cihra, Tesla’s story as it heads for the second half of 2018 is one of leverage, as the company starts absorbing more of its fixed cost of production and expanding its margins. The Guggenheim Securities analyst also noted stated that Tesla’s in-house development of the vehicles’ components would prove to be a difference-maker.

“Tesla reaffirmed its guide for positive GAAP net income and cash flow in Q3 and Q4, which is in line with our estimates, but we believe much more optimistic than many investors continue to assume. Yet while six months later than initially projected, we continue to estimate that with Tesla now hitting its 5K/week production bogey for Model 3, that sets up prospects for the company’s overall economic model to flip from sizeable cash-burn in 1H18E to profitability in 2H18E.

“With just small tweaks post Q2 deliveries, our EPS estimates continue to be >$10 in 2019E and >$18 in 2020E, remaining well above consensus. Because Tesla makes so much of its cars in-house, we believe its proportion of FIXED cost/vehicle are particularly high (driving losses and cash-burn today) but with the flip-side then being that as Model 3 volumes now ramp, their fixed-cost absorption should make Tesla’s LEVERAGE that much higher,” Cihra wrote, according to a Barron’s report.

Guggenheim Securities expects Tesla’s total vehicle production to hit 58,000 this coming quarter, followed by 67,000 in Q4 2018.

Tesla is currently attempting to achieve profitability by Q3 or Q4 2018. Responding to a report from The Economist alleging that Tesla would do a capital raise this year, Elon Musk declared that the company would start being profitable by the third or fourth quarter. Musk doubled down on profitability in the company’s Q1 2018 earnings call, when he stated that it was “high time” for Tesla to become profitable. In order to accomplish this, Tesla has adopted a series of strategies, including trimming 9% of its workforce and opening orders for the higher-priced variants of the Model 3.

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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.

Investor's Corner

Tesla could save $2.5B by replacing 10% of staff with Optimus: Morgan Stanley

Jonas assigned each robot a net present value (NPV) of $200,000.

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Credit: Tesla Optimus/X

Tesla’s (NASDAQ:TSLA) near-term outlook may be clouded by political controversies and regulatory headwinds, but Morgan Stanley analyst Adam Jonas sees a glimmer of opportunity for the electric vehicle maker. 

In a new note, the Morgan Stanley analyst estimated that Tesla could save $2.5 billion by replacing just 10% of its workforce with its Optimus robots, assigning each robot a net present value (NPV) of $200,000.

Morgan Stanley highlights Optimus’ savings potential

Jonas highlighted the potential savings on Tesla’s workforce of 125,665 employees in his note, suggesting that the utilization of Optimus robots could significantly reduce labor costs. The analyst’s note arrived shortly after Tesla reported Q2 2025 deliveries of 384,122 vehicles, which came close to Morgan Stanley’s estimate and slightly under the consensus of 385,086.

“Tesla has 125,665 employees worldwide (year-end 2024). On our calculations, a 10% substitution to humanoid at approximately ($200k NPV/humanoid) could be worth approximately $2.5bn,” Jonas wrote, as noted by Street Insider.

Jonas also issued some caution on Tesla Energy, whose battery storage deployments were flat year over year at 9.6 GWh. Morgan Stanley had expected Tesla Energy to post battery storage deployments of 14 GWh in the second quarter.

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Musk’s political ambitions

The backdrop to Jonas’ note included Elon Musk’s involvement in U.S. politics. The Tesla CEO recently floated the idea of launching a new political party, following a poll on X that showed support for the idea. Though a widely circulated FEC filing was labeled false by Musk, the CEO does seem intent on establishing a third political party in the United States. 

Jonas cautioned that Musk’s political efforts could divert attention and resources from Tesla’s core operations, adding near-term pressure on TSLA stock. “We believe investors should be prepared for further devotion of resources (financial, time/attention) in the direction of Mr. Musk’s political priorities which may add further near-term pressure to TSLA shares,” Jonas stated.

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Investor's Corner

Two Tesla bulls share differing insights on Elon Musk, the Board, and politics

Two noted Tesla bulls have shared differing views on the recent activities of CEO Elon Musk and the company’s leadership.

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Credit: Tesla

Two noted Tesla (NASDAQ:TSLA) bulls have shared differing views on the recent activities of CEO Elon Musk and the company’s leadership.

While Wedbush analyst Dan Ives called on Tesla’s board to take concrete steps to ensure Musk remains focused on the EV maker, longtime Tesla supporter Cathie Wood of Ark Invest reaffirmed her confidence in the CEO and the company’s leadership.

Ives warns of distraction risk amid crucial growth phase

In a recent note, Ives stated that Tesla is at a critical point in its history, as the company is transitioning from an EV maker towards an entity that is more focused on autonomous driving and robotics. He then noted that the Board of Directors should “act now” and establish formal boundaries around Musk’s political activities, which could be a headwind on TSLA stock. 

Ives laid out a three-point plan that he believes could ensure that the electric vehicle maker is led with proper leadership until the end of the decade. First off, the analyst noted that a new “incentive-driven pay package for Musk as CEO that increases his ownership of Tesla up to ~25% voting power” is necessary. He also stated that the Board should establish clear guidelines for how much time Musk must devote to Tesla operations in order to receive his compensation, and a dedicated oversight committee must be formed to monitor the CEO’s political activities.

Ives, however, highlighted that Tesla should move forward with Musk at its helm. “We urge the Board to act now and move the Tesla story forward with Musk as CEO,” he wrote, reiterating its Outperform rating on Tesla stock and $500 per share price target.

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Tesla CEO Elon Musk has responded to Ives’ suggestions with a brief comment on X. “Shut up, Dan,” Musk wrote.

Cathie Wood reiterates trust in Musk and Tesla board

Meanwhile, Ark Investment Management founder Cathie Wood expressed little concern over Musk’s latest controversies. In an interview with Bloomberg Television, Wood said, “We do trust the board and the board’s instincts here and we stay out of politics.” She also noted that Ark has navigated Musk-related headlines since it first invested in Tesla.

Wood also pointed to Musk’s recent move to oversee Tesla’s sales operations in the U.S. and Europe as evidence of his renewed focus in the electric vehicle maker. “When he puts his mind on something, he usually gets the job done,” she said. “So I think he’s much less distracted now than he was, let’s say, in the White House 24/7,” she said.

TSLA stock is down roughly 25% year-to-date but has gained about 19% over the past 12 months, as noted in a StocksTwits report.

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Investor's Corner

Cantor Fitzgerald maintains Tesla (TSLA) ‘Overweight’ rating amid Q2 2025 deliveries

Cantor Fitzgerald is holding firm on its bullish stance for the electric vehicle maker.

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Credit: Tesla China

Cantor Fitzgerald is holding firm on its bullish stance for Tesla (NASDAQ: TSLA), reiterating its “Overweight” rating and $355 price target amidst the company’s release of its Q2 2025 vehicle delivery and production report. 

Tesla delivered 384,122 vehicles in Q2 2025, falling below last year’s Q2 figure of 443,956 units. Despite softer demand in some countries in Europe and ongoing controversies surrounding CEO Elon Musk, the firm maintained its view that Tesla is a long-term growth story in the EV sector.

Tesla’s Q2 results

Among the 384,122 vehicles that Tesla delivered in the second quarter, 373,728 were Model 3 and Model Y. The remaining 10,394 units were attributed to the Model S, Model X, and Cybertruck. Production was largely flat year-over-year at 410,244 units.

In the energy division, Tesla deployed 9.6 GWh of energy storage in Q2, which was above last year’s 9.4 GWh. Overall, Tesla continues to hold a strong position with $95.7 billion in trailing twelve-month revenue and a 17.7% gross margin, as noted in a report from Investing.com.

Tesla’s stock is still volatile

Tesla’s market cap fell to $941 billion on Monday amid volatility that was likely caused in no small part by CEO Elon Musk’s political posts on X over the weekend. Musk has announced that he is forming the America Party to serve as a third option for voters in the United States, a decision that has earned the ire of U.S. President Donald Trump. 

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Despite Musk’s controversial nature, some analysts remain bullish on TSLA stock. Apart from Cantor Fitzgerald, Canaccord Genuity also reiterated its “Buy” rating on Tesla shares, with the firm highlighting the company’s positive Q2 vehicle deliveries, which exceeded its expectations by 24,000 units. Cannacord also noted that Tesla remains strong in several markets despite its year-over-year decline in deliveries.

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