Tesla On Track To Break Sales Record This Quarter, Elon Musk's Email Says

Injecting a new life to the sagging stock of electric car maker Tesla, CEO Elon Musk, in an e-mail assured employees that the company is on the way to achieve target production numbers for Model 3 in this quarter and may set a record.

Tesla shares rose 1.4 percent on Thursday after hitting constant lows in the past six days. The CEO’s optimism in the letter helped Tesla add almost $500 million to the market cap.

Likely to exceed Q4 record of 2018

Musk’s upbeat e-mail states that as on May 22, Tesla carries more than 50,000 net new orders for the existing quarter.

It said trends suggest Tesla will surpass the record 90,700 deliveries made in Q4 of 2018 to attain record deliveries/sales quarter in Tesla history.

Musk also called up employees to apply more efforts to get a sustained output of 1,000 Model 3 ′ s per day, He noted the output has already averaged 900/day in the current week and is moving to the goal of 7,000/week.

Experts split on Musk’s message

However, experts are divided on the message of CEO Elon Musk for the electric-auto maker.

John Petrides, managing director, and portfolio manager at Point View Wealth Management is least thrilled about the company’s prospects.

In Petride’s diagnosis, Tesla’s valuations are still high. It is grappling with cash flow issues, balance sheet issues, CEO’s wildcard, and board members are avoiding re-election.

“You finally have the shine … coming off the car. And that’s what you’re seeing happening in the stock right now, and it’s still unattractive for my taste,” the analyst added.

But Roth Capital Partners’ Craig Irwin sees many bright spots in the company and said still stacks up against many of its staid competitors:

“Culturally, Tesla’s a very different company then the automotive guys that they compete with, right? The automotive guys are about making money. For them, so selling units is important, profitability and the margins and the dollar margins are very, very important," he commented.

Irwin said Tesla is going after a massive new market. Any go-slow from the traditional automotive guys would be positive for Tesla.

Differing with Irwin, Gabe Hoffman, founder of hedge fund Accipiter Capital Management said, “Ultimately, Tesla will go to zero.”

Hoffman said a company losing billions of dollars and struggling with a debt of over $10 billion and $3 billion of current accounts payable on the desk, certainly has a real problem.

Market mandarins cut the stock outlook

Meanwhile, many analysts lowered the price outlook for Tesla stock. Citi analysts predicted Tesla’s shares could plunge more than 80 percent to $36 over “lingering demand/free cash flow concerns.”

Making some hard observations, Morgan Stanley research analyst Adam Jonas also expressed doubts over the company’s capability to grow. He dubbed Tesla as “a distressed credit and restructuring story.”

In the latest downward revision to the stock, Loup Ventures co-founder Gene Munster said Tesla would miss its delivery expectations in 2019. His outlook on delivery is just 310,000 vehicles against the official guidance ranging from 360,000 to 400,000.

The scrutiny of analysts on Tesla’s stock increased after the company entered into a cost-cutting mode. An email by Elon Musk obtained by CNBC showed employees being asked to stay conscious of the “hardcore” spending cuts.