Tesla Motors Inc (TSLA) May Achieve Production Targets Early

Tesla Motors Inc (TSLA) May Achieve Production Targets Early
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Tesla Motors Inc (NASDAQ:TSLA) may achieve its target of producing 40,000 vehicles by the end of 2014, a  quarter or two early, says a report from Seeking Alpha by Green Energy Addict. The author also feels that the stock may rise to as much as $500 in a few years.

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Per week production rising

Tesla Motors Inc (NASDAQ:TSLA) announced that it is expecting 6,900 deliveries in the fourth quarter, an increase from original guidance of 6,000. If the average revenue per delivery is $110,000 as it was last quarter, then total revenue will come around $759 million in the fourth quarter. Analysts are expecting an average of $657 million, which seems to be easily achievable.

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Production is another significant focus for Tesla as the company is not struggling to sell its vehicles. The EV manufacturer released guidance of annualized rate of production of 40,000 vehicles by the end of 2014, which totals up to around 769 vehicles per week.

In the second quarter of 2013, Tesla Motors Inc (NASDAQ:TSLA) produced 400 vehicles per week. In the third quarter this number increased to 500 per week. Further, while releasing its third quarter earnings, Tesla stated that the production has reached 550 vehicles per week. The next month, the production number increased to 600 vehicles per week, according to Tesla chief Elon Musk.

Tesla to achieve target easily

Achieving the production target of 769 from where the company is standing right now is not very tough. Also, this would take less than a year and anytime more than that would be surprising, according to the author.

Halfway through the quarter, Tesla announced that the quarter exceeded its own expectations by 900 vehicles, which means an exceeded production quarterly rate of 1800 or 136 per week. If 136 more is added to 550 announced in November, then Tesla might have reach as many as 686 vehicles per week since the quarter ended.

According to author Green Energy Addict, Tesla Motors Inc (NASDAQ:TSLA) has the potential to reach the 40,000 annual rate before the announced time, “possibly in the second of this year instead of the fourth quarter.”

According to consensus analyst estimates, the company will post an EPS of $1.53, but there is a good chance that this number could come somewhere near $2.00. If the stock trades at 100P/E, Tesla Motors Inc (NASDAQ:TSLA) could achieve a target of $500 per share. In defending the high PE, the author says, “While I’m not saying a 100 P/E is necessarily justified, we’ve all seen high-growth popular stories get 100 P/E ratios and more such as Netflix, LinkenIn, salesforce.com, Facebook, etc.”

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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