Life has been a little rough for Elon Musk lately.
Not only has he faced launch problems with his latest SpaceX venture, his beloved Tesla (TSLA) may be also be giving him a bit of angst.
Shares of the electric carmaker-- once the darling of Wall Street-- have taken a decidedly southern turn since peaking in September, losing about a quarter of their value. In November, Tesla reduced its 2014 delivery goal to 33,000 from 35,000 because a production issues meant fewer cars were available. And now, Reuters is reporting Musk is furious with the company’s weak sales in China, threatening firings and demotions there unless more vehicles start moving out the door in the world’s biggest market.
We will know more about the state of Tesla when the company releases its fourth quarter and full year financial reports after the close of trading today. But Yahoo Finance Editor-in-Chief Aaron Task doesn’t think Tesla investors have reason to be nervous.
“I am a Tesla shareholder and I’m not worried at all,” he says. “Certainly the momentum story around Tesla has shifted and I think that’s part of the overall shift of the market.”
Task believes interest in Tesla has been built mostly on potential.
“Tesla was the ultimate story stock for a while because you could look far into the future and say, wow, it’s going to transform not just the transportation industry but the energy industry and this could be the greatest company, the greatest wealth engine of all time,” he adds. “There’s still an opportunity to get there, but as the company matures and starts to put hard numbers around profitability, then you can actually do some real evaluation.”
Task says only certain kinds of investors should be dabbling in Tesla anyway.
“It’s not a widows and orphans kind of stock,” he notes. “It’s definitely something that’s a speculative name. If you’re going to hold it, you have to know there’s a tremendous amount of downside risk just as there still is tremendous upside opportunity if everything goes right for Tesla.”
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Task admits the sluggish sales in China are something of a concern.
“It’s been an issue now for Tesla for the better part of a year,” he says. “Part of it is the difficulties of doing business in China for any Western company right now. It’s hard to make inroads unless you hand over the blueprints and say, here is our technology. And Elon Musk and Tesla definitely don’t want to do that.”
Task points out that Musk is really counting on strong demand in China to take Tesla to the next level.