What's going on?

Tesla�s profits fell back into the red in its most recent quarter, but the stock didn�t move much. Investors appear much more focused on the expected launch of the Model 3 later this year.

What does this mean?

In the third quarter of 2016, Tesla helped its founder Elon Musk �throw a pie in Wall Street�s face� by recording a rare profitable quarter. However, last quarter it once again lost money, which was expected partly because of increased costs associated with its new Model 3. It’s the first Tesla car designed for the mass market (the Model S and X are targeted at the more expensive end of the market). Perhaps most importantly, the company affirmed its previous guidance for the Model 3�s production timeline, i.e. no delays are expected.

Why should I care?

For the stock: The time for Tesla to deliver is approaching. (tweet this)

Tesla�s stock has jumped about 50% over the past year and is hovering near its all-time high. The company says it will begin producing its Model 3 in July and shipping to customers by September. Initially, it will lose money on every car it sells, but the idea is that as production increases, its costs per car will decrease, and it will become very profitable. Tesla has to get a lot of things right for that to happen, but investors seem to be betting that it will.


The bigger picture: Tesla is the ultimate startup � and it�s very likely going to raise another round soon.

Tesla is able to burn through so much money because it gets cash from investors. It�s expected to do another cash call sometime this year, and investors are very likely to, once again, pony up to own a piece of Elon Musk�s vision. His plans are ambitious, and there are a number of prominent investors who aren�t sold on them at all. We are, at least, getting closer to knowing if he, and Tesla�s shareholders, will be successful!