Press Release (ePRNews.com) - PALO ALTO, Calif. - Aug 03, 2017 - Tesla again highlighting investors’ faith in CEO Elon Musk’s ability to turn around the loss-making company even as it guzzles cash to ramp up production of its mass-market Model 3 sedans.
Gains in the high-flying stock, which has already risen 52 percent this year, were set to add nearly $4 billion to Tesla’s market value.
Tesla said on Wednesday quarterly revenue doubled and that it was receiving more than 1,800 daily reservations for the newly launched Model 3s. Tesla has burned through over $2 billion in cash so far this year ahead of the launch, and expects to spend another $2 billion in the second half.
The company’s aggressive spending has been a lightning rod for criticism, but investors have continued to bet on CEO Elon Musk’s clean-energy vision and the success of the Model 3.
“Early Model 3 launch milestones look strong. Tesla is counting on the Model 3, launched late last month, to help it turn profitable and transform it from a niche player
to a heavyweight in the automobile industry.
“We believe a positive reception to the Model 3 from early customers could significantly increase the value of the Tesla brand and further accelerate demand,” Michael Ulrich Hartmann Equity Research analyst James Hansworth said.
At least two brokerages raised their price targets on the stock. RBC Capital Markets raised its target price by $31 to $345, pushing it well ahead of the median price target of $322. Tesla’s last launch was the luxury Model X SUV in 2015,which had several production problems and a price tag starting around $80,000.
Musk has tried to reassure investors saying that a simpler Model 3 design will greatly reduce potential assembly-line problems.
The Model 3 is part of Musk’s broader plan to build a clean energy and transportation company that offers electric semi trucks, rooftop solar energy systems and large-scale battery storage systems.
Tesla also said demand for its Model S and X cars remained strong, allaying concerns that the launch of the cheaper Model 3 would eat into sales of its more expensive vehicles.
The company’s shares were up 5.9 percent at $345.27, having given up some of their earlier gains.