Tesla Motors Inc (NASDAQ:TSLA) will be on the watch list of analysts and investors on Monday after stock prices shot-up 41 percent last week, marking its best weekly performance since its IPO launch in 2010.
Tesla Motors Inc (NASDAQ:TSLA), which primarily manufactures electric cars, posted its first profit in the first quarter of 2013, and fueled a shares surge on the stock market. However, some analysts are cautious and have recommended that there may be some hurdles ahead in spite of the company posting a profit in the first quarter.
Tesla Motors’ Pre & Post Earnings
The Q1 2013 earnings of Tesla outperformed market estimations. Shares surged around 20 percent after the earnings declarations. CEO of Tesla Motors Inc (NASDAQ:TSLA) Elon Musk stated that the company has posted a profit for the first time in a quarter. The market was not expecting the size of earnings that Tesla Motors Inc (NASDAQ:TSLA) posted. In the month before earnings release, shares of Tesla increased 40 percent on the expectations of strong earnings.
Analyst Take on Tesla Motors Inc (TSLA)
Ben Schuman, an analyst at Pacific Crest, said that the good performance and remarkable marketing strategy of the company along with factory ramp has helped the automobile maker so far, but the company has also benefited from increased demand and sale of the ZEV (zero emission-vehicle) over the past two years.
He further said the gross margins of the company should increase from 5 percent to 25 percent after excluding ZEV credits and that the demand for the cars must be stable. He said, “This can be done, but we do not think the current valuation adequately reflects execution risk.”
Jefferies, last week, has increased its price target for Tesla Motors Inc (NASDAQ:TSLA) from $45 to $68 per share and feels that investors who continue to play short on this stock will be in trouble ahead. Most investors are going for shorts on this stock even when the company has returned 76 percent year to day and 57 percent since the pre-announcement of the first quarter results. Elaine Kwei and Peter Nesvold from Jefferies have said that investors who shorted Tesla Motors Inc (NASDAQ:TSLA) in a bid to cover that will fuel the prices of the stock even higher. Kwei and Nesvold further said that Elon Musk has made the air positive for Tesla Motors Inc (NASDAQ:TSLA) with his various tweets and regular releases in the press about the processes in the company, and this could bring greater hurdles for shorting investors.
Separately, another company, Post Holdings Inc (NYSE:POST), the cereal company making Bunches of Oats, Pebbles and Grape Nuts, will post second quarter earnings on Monday. Interactive Software will also probably report fourth quarter earnings of 23 cents per share.
