Tesla Motors Inc (TSLA) disclosed over the weekend that it met its 2015 goal of delivering at least 50,000 units.
To be exact, TSLA sold 50,580 units during the year, and with its Gigafactory in Nevada now complete, CEO Elon Musk thinks the company can produce 1,600 Model X and Model S cars a week by the end of 2016.
Therefore, all looks good for Tesla … except the TSLA stock price and its likely direction in the year ahead.
What Monday Proves About TSLA Stock
You can learn a lot about individual stocks anytime the market goes into a free fall. Case in point: TSLA stock fell more than 7% on Monday despite reporting strong deliveries for the year and guiding for a big hike in production.
In other words, TSLA stock fell three times more than the Nasdaq or S&P 500 despite having good news.
There are two big takeaways: TSLA stock is too expensive and there are underlying concerns that prevent shareholders from being too optimistic about the year ahead. Personally, I don’t blame anyone for being skeptical about TSLA right now.
Thanks to several billion dollars, Elon Musk now has the luxury of having manufacturing capabilities in place. The pertinent question, however, is whether the demand will be present to make Tesla’s investment worthwhile.
It should be noted that Tesla’s 50,580 units delivered last year exceeded the low-end of the company’s outlook, but fell short of the high-end at 55,000, and far lower than the 65,000 that many analysts foresaw earlier in 2015.
Obviously TSLA has not over-delivered during the last year.
2 Big Concerns to Weigh on TSLA Stock
Tesla had a decent end to 2015, but we still don’t know how the company will respond to a recent Consumer Reports downgrade of the Model S or to new competition.
Back in late October, Tesla’s two-year run of having Consumer Reports recognition for “Best Overall Car” was derailed after the agencies gave the Model S a worse-than-average rating. As an influential voice for new car buyers, it will be very interesting to see how this change affects TSLA moving forward.
Investors were already aware of competition in the electric car space, like BMW and Nissan (ADR) (NSANY) among others. However, powerhouse automobile manufacturers are making big pushes into the electric car space — not with a single car, but multiple cars. These are companies with resources that Tesla could only dream of.
The big name that comes to mind is Ford (F), who recently vowed to add 13 electric vehicles to its lineup by 2020, accounting for 40% of its fleet. In total, Ford plans to spend $4.5 billion to develop these new models. As a result, TSLA is about to face a competitor unlike anything it has encountered thus far.
The Biggest Concern of Them All
At the end of the day, the above concerns are legitimate threats for TSLA, and the large losses it created on Monday are not a positive indicator moving forward. To make matters worse, TSLA stock could have a ways to fall.
Ford sells several million vehicles each year and has about 25 times more annual revenue than Tesla, yet Ford is just twice as valuable as TSLA.
Based on the size difference, one would think that Ford would be several times more valuable than the house that Elon Musk built, and the fact that it is not creates the potential for big downside in TSLA stock.
Don’t be surprised if TSLA stock crumbles in 2016.
As of this writing, Brian Nichols did not hold a position in any of the aforementioned securities.
