When it comes to high-flying tech stocks like Tesla Motors Inc. (NASDAQ: TSLA), the market is a fickle master, sending prices to stratospheric levels, only to have them come crashing to earth with no rhyme or reason. Monday was a case in point for Elon Musk’s electric car company.
The stock got hammered after reporting fourth-quarter deliveries of 17,400 vehicles. As media reports noted, that was on the “low end” of its previously issued guidance of 17,000 to 19,000. Never mind that it represented a 50% increase from the year-earlier period, it wasn’t the blowout performance that Wall Street expects from companies like Tesla, shares of which have surged more than 500% over the past three years. Though some will argue that’s how the expectations game is played on Wall Street, oftentimes the line between Wall Street “stud” and “dud” is a blurry one.
For instance, what would have happen if Tesla reported 18,000 deliveries, the midpoint of its forecast, or at the high end of 19,000? Shares of the Palo Alto, Calif.-based company probably would have still tumbled because Tesla failed to “beat its numbers.” The stock probably would have still dropped with a 20,000-delivery report because it didn’t blow away expectations by a big enough number.
Tesla also got hammered for taking a “cautious approach” to the roll-out of its new Model X sedan in light of recent quality problems with its older Model S that were highlighted by Consumer Reports. It made 507 Model Xs during the fourth quarter but delivered only 208 of them, a “go slow approach” that is understandable in light of those issues.
“Model X deliveries are in line with the very early stages of our Model X production ramp as we prioritize quality above all else,” according to a press release. “That ramp has been increasing exponentially, with the daily production rate in the last week of the year tracking to production of 238 Model X vehicles per week.”
Now imagine what would have happened if Tesla had announced a huge ramp-up in Model X production. Wall Street analysts would have slammed the company for not addressing its quality control problems. In other words, Tesla is caught in a damned-if-you-do and damned-if-you-don’t scenario. That’s why the time is right for adventurous investors to buy Tesla shares before Wall Street realizes that it overreacted to this week’s news.
The Average American Is Losing Their Savings Every Day (Sponsor)
If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4% today, and inflation is much higher. Checking accounts are even worse.
Every day you don’t move to a high-yield savings account that beats inflation, you lose more and more value.
But there is good news. To win qualified customers, some accounts are paying 9-10x this national average. That’s an incredible way to keep your money safe, and get paid at the same time. Our top pick for high yield savings accounts includes other one time cash bonuses, and is FDIC insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes and your money could be working for you.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.