By Michael Ide
What passed for bullish last month has become passé following Tesla's recent guidance
Tesla Motors (NASDAQ:TSLA) has been on a tear for the last few days after beating second-quarter consensus estimates and then guiding towards an incredible 100,000 run rate in 2015, causing even the more skeptical analysts to raise price targets on the current king of growth stocks. But even if the back-and-forth about the company's market cap has left you with a bit of Tesla-fatigue (and who could blame you), it's striking how much the bull case has advanced in just the last month.
Tesla expects 100,000 sales a year faster than last month's bull case
Back in July you probably saw this 'mind-boggling' chart of expected Tesla Motors sales over at The Motley Fool claiming that Tesla vehicle deliveries would hit half a million by 2020.
This was the bull case, based on Tesla Motors' press releases and comments from CEO Elon Musk, and it was guiding for deliveries to hit 100,000 in 2016 instead of 2015. So it's not just that guidance is a little bit higher than the market had been expecting, the current guidance pulls deliveries forward an entire year. Put in those terms you can see why the bulls pushed its price up another 10%.
Tesla bulls expect a lot of things to go right
But this same chart can be used to explain the bears' pessimism about Tesla. Despite having a strong quarter, Tesla delivered about 7,600 vehicles in Q2 and guided for another 7,800 units during Q3, while JPMorgan had been expecting 7,800 and 10,000, respectively. At this rate it's not clear that Tesla will make it to 35,000 deliveries by year's end. That wouldn't be a disaster for the company, it's still supply limited without spending a dime on advertising, but it could mean that the market hasn't priced any margin for error into a very ambitious growth plan.
Next year's sales growth is supposed to come from the Model X, Tesla Motors' all-electric SUV, and future earnings growth is expected from the more affordable Model E due out in a couple of years, a fairly optimistic view of what the Gigafactory can accomplish, and expansion into Europe and China. But next quarter's slightly lowered guidance is a reminder that things don't always go as planned.