Tesla (TSLA) Keeps Speeding, But Should Investors Slow Down?

Tesla (NASDAQ:TSLA) stock surged 6.87% on Thursday morning after the company beat revenue expectations and posted a less-than expected second quarter loss on Wednesday. Still, some Wall Street analysts question the overall fundamental viability of the company and began to hit the breaks on Tesla bulls.

Tesla’s second quarter revenue skyrocketed 200% year-over-year to $2.79 billion, which also beat the Zacks Consensus Estimate of $2.55 billion.

The electric carmaker reported a loss of $2.04 per share, or $336.4 million. Excluding non-recurring items, the company posted a loss of $1.33 per share, which beat Street estimates by a comfortable amount.

Tesla’s reported that the combined sales of its Model S and Model X grew 52% from the year-ago period. Elon Musk also reaffirmed his stance that Tesla will be able to produce 500,000 electric vehicles a year by the end of 2018.

And this is why some analysts are preaching caution about Tesla and trying to fight back against Musk’s confidence.

Some of the Street’s biggest concerns about Tesla rest firmly on future capital needs and uncertainty that Tesla can reach production goals for its new, less-expensive Model 3 sedan.

"We were surprised by the after hours move in TSLA shares and continue to be cautious on the stock, especially as the risk profile shifts from the hype of the Model 3 to execution or 'production hell' as Elon Musk refers to it," Cowen analyst Jeffrey Osborne wrote in a note to clients on Thursday. "We believe Tesla shares are an overvalued show me story."

"As Tesla's Model 3 ramp proceeds, we continue to have more questions than answers about the company and the vagueness of details coupled with lack of disclosure from management about true capital needs and expense levels need to obtain their ultimate vision," Osborne continued.

The analyst reaffirmed his “underperform” rating but raised his price target. He upped his Tesla outlook from $155 per share to $170 per share. Still, that price would mark a massive drop off from today’s $347 a share figure.

Musk seems completely confident that his company will be able to meet the massive jump in production, despite many outside concerns.

"What people should absolutely have zero concern about, and I mean zero, is that Tesla will achieve a 10,000 unit production week by the end of next year… I think people should really not have any concerns that we won't reach that outcome from a production rate," Musk said on Tesla's conference call on Wednesday.

Tesla stock climbed from $213.69 per share at the end December to the $347 per share it rests at today. However, Tesla is currently a Zacks Rank # 3 (Hold) and scored and “F” for both Value and Growth in our Style Score system.

The raw numbers don’t always support the bullish run Tesla is on. It seems at this point that investors aren’t looking at Tesla like they do Ford (NYSE:F) or other auto manufacturers. Instead, they view the company as a long-term play with eyes on a new electric car revolution.

Only time will tell if the man who wants to colonize Mars can really deliver on his bold promise to deliver hundreds of thousands of cars in the next year. But for now, the Street is telling investors to slow their roll on the stock.

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