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Tesla Motors (NASDAQ:TSLA) has a bad problem and a good problem. The bad problem is a third fire in its Model S vehicles has raised safety concerns, and an accident in its Fremont California factory resulted in employee injuries. The good problem is that the company cannot make cars fast enough to keep up with the soaring demand.

So far, both problems have taken their toll on the company's stock, driving it down near 30 percent from its all time high. But a fix to both of them can turn the stock around. How quickly can the fix come?

Not that quickly, I'm afraid. It will take a long time for Tesla to reassure prospective customers that its vehicles deserve a top brand image that commands a hefty premium over comparable brands; and time may help the competition catch up. The string of accidents will further put Tesla's buzz on hold, as discussed in a previous piece here.

Addressing the second problem won't be easy either. The company must build the right assembly lines to accommodate demand and achieve increasing returns to scale to bring the manufacturing of its vehicle in line with comparable models, and that takes time and money. What should investors do?

It depends on the investment horizon and the investment style of each investor. Short-term oriented investors may want to either stay away from the stock or establish a short position, as a big decline in the stock may prompt margin calls for investors on the long side, if it hasn't happened already. Besides, Tesla may have to appeal to a secondary offering to raise funds for building scale, further depressing the value of its stock. Long-term oriented investors may want to wait until there is better visibility about the future of the company, and the technicals of the stock look better.

A few words of caution: Shorting stocks is a risky strategy, especially if there is a large short interest (see table).

Tesla versus Ford and General Motors: Financials November 2013

Company

Short % of Float

Forward PE

Qtrly Revenue Growth (yoy)

Qtrly Earnings Growth (yoy)

Operating Margin

Operating Cash Flow

Tesla Motors (NYSE:F)

33.40

91.29

1420.10

--

-16.38

-112.63M

Ford

2.20

9.66

14.70

18.6

4.55

9.36B

General Motors (NYSE:GM)

8.20

7.73

3.90

-23.4

1.39

9.88B

Tesla versus Ford and General Motors: Financials July 2013

Company

Short % of Float

Forward P/E

Qtrly Revenue Growth (yoy)

Qtrly Earnings Growth (yoy)

Operating Margin

Operating Cash Flow

Tesla Motors

44.10

83.29

678%

--

-95.41M

-266.08M

Ford

2.0

8.53

10.40

--

4.83

7.1B

General Motors

7.50

25.69

15.60

3

14.90

682.83

Source: How Quickly Can Tesla Fix Its Problems?