Tesla Motors Inc (NASDAQ:TSLA) is one of the most talked about stocks on the market right now. The company is due to announce its earnings report for the first three months of 2013 this afternoon after the market closes. Trading is sure to be volatile after the report as a huge proportion of the company’s shares are currently being held short.
A new report from Barclays PLC (NYSE:BCS) (LON:BARC), is optimistic about the company’s short term future, but remains skeptical about Tesla Motors Inc (NASDAQ:TSLA)’s ability to transition to a mass market auto market. The report puts a twelve months price target of $65 on the company’s stock, a 71% increase from the previous target of $38.
According to the report, despite the strong showing of Tesla Motors Inc (NASDAQ:TSLA) in the luxury car market, its future in what the report calls the “mass affluent” auto market is far from guaranteed. On the company’s next step, its generation III vehicle, the analysts remain agnostic. On entry into the mass market, the Barclays PLC (NYSE:BCS) (LON:BARC) analysts are “downright skeptical.”
The chart above is the way that Tesla Motors Inc (NASDAQ:TSLA) has publicly at least, mapped out its own future. The era of the Tesla Roadster is behind the company, and the Tesla Model S is currently taking off. The firm is expected to announce its first profit of all time this afternoon on stronger than expected takings from that model.
Gen III is where the problems begin for the Barclays analysts. Tesla Motors Inc (NASDAQ:TSLA) is leveraging the luxury car market in order to pay for the technology needed for a mass affluent market car, the Gen III, known as the Tesla Bluestar. That’s the firm’s next big move, and it’s not expected until about four years from now.
In order to make the Gen III market a success, Tesla Motors Inc (NASDAQ:TSLA) will need to sell 300,000 cars. This will be a more difficult sell for the company. Those that can afford to buy a Model S can also afford to own another car, and don’t have to rely on that vehicle all the time. Gen III buyers will not be as flexible.
Whether or not Tesla Motors Inc (NASDAQ:TSLA) manages the jump to Gen III isn’t important this afternoon. Trading after the company releases its earnings will be furious, and risk averse investors should stay away.