By Nico Grant
Elon Musk’s ebullience wasn’t enough to spare Tesla’s stock.
Year-to-date, shares of Tesla (TSLA) have dropped 16 percent as investors weigh CEO Musk’s vision of a green future against the carmaker’s challenges in scaling up and achieving a profit. Without these two developments, Tesla has lost its shine as a darling of investors.
“If we can execute on our production and our delivery goals in the second half of the year, we got a great chance to be non-GAAP profitable,” said Jason Wheeler, Tesla’s CFO, on a recent earnings call.
This means that if Tesla bypassed conventional accounting principles and ignored the hundreds of millions it is spending on development of the Model 3 sedan, the company would be profitable.
But it is not.
The volatility of Tesla’s stock reflects fickle investor confidence that the company can reach its lofty ambitions.
Musk lovers snap up Tesla stock when the charismatic CEO says the company will expand enough to use electric cars, energy production and energy storage to foster a green world free of fossil fuels.
Tesla’s stock rose 0.59 percent recently as Musk teased a new energy generation and storage product that would capitalize on the company’s merger with SolarCity, a solar roof manufacturer.
“Aiming for Oct 28 unveil in SF Bay Area of new Tesla/SolarCity solar roof with integrated Powerwall 2.0 battery and Tesla charger,” Musk said on Twitter.
But when it looks like Tesla can’t make money or build enough cars to meet massive demand, investors panic and short the stock.
Tesla shares had a six-week descent at the start of 2016, losing 35.69 percent in value. The nosedive was fueled by investors’ fears of slow Model X production, increased competition from General Motors’ Chevy Bolt and cheap gas that might make electric cars look less attractive.
The company’s market performance rebounded, but Tesla has since underperformed the market.
The carmaker has 273,000 preorders for the entry-level Model 3 sedan, but that vehicle won’t enter production until 2018. And Tesla has faced complications in scaling up before. The production variant of the Model X crossover was supposed to arrive in early 2014, but it was delayed several times until late 2015.
In his quarter two earnings call earlier this year, Musk seemed to understand there is little margin for error as he seeks to grow his business.
“We’ve just got to build those damn things,” he said.