Making an investment case for Tesla Motors Inc (NASDAQ:TSLA) is not that difficult. One only needs to look toward the future. Autonomous vehicles, connected cars, and cleaner/renewable energy are expected to be strong growth drivers in the years ahead. And those are two of Tesla’s main business segments. TSLA stock, then, should be in good hands.
At last week’s 2017 Consumer Electronics Show in Las Vegas, for instance, cars and auto technology played an even bigger role compared to three to five years ago. The show included keynotes or presentations from almost every major automaker and A-list auto suppliers.
In other words, Tesla — which arguably first intersected the auto and tech sectors — is in the right growth lane. While TSLA stock has yet to full respond to the growth drivers ahead, it’s only a matter a time.
Tesla Needs to Graduate From Potential
Still, Tesla’s toughest challenge is to prove to critics that it can graduate the business from one of “strong potential” to a money-making venture. To date, that has been prevailing attack on CEO Elon Musk and what has kept Tesla stock from driving meaningfully higher over the past couple years.
While Musk has delivered on the company’s new Gigafactory, which began production last week, Tesla again missed on its most recent quarterly vehicle production target — keeping up a track record TSLA has been trying to shed. That news sent TSLA shares down some 2%.
Tesla delivered roughly 22,200 vehicles during the last three months of 2016, falling short of the original projection of 25,000 units. For the full year, the electric car company delivered 76,230 units — also shy of the 80,000 vehicles Musk had promised to deliver.
From my glass-half-full perspective, the fact that Tesla came less than 4,000 units shy of its full-year total was encouraging. Critics, however, took the miss as more reasons to avoid TSLA stock.
Said Barclays analyst Brian Johnson last week:
“There is a high risk of execution missteps, a challenged track record on meeting timelines, cost challenges and potential impact from an otherwise full plate of initiatives in ’17.”
The Gigafactory Changes Things
Despite the noise, there’s also reason for increased optimism about Tesla stock. Notably, the new Gigafactory — which was delivered on time — could be the game-changer Tesla has needed.