As Tesla Ramps Model 3 Production The Stock Downshifts

&l;p&g;&l;img class=&q;dam-image getty size-large wp-image-930533880&q; src=&q;×0.jpg?fit=scale&q; data-height=&q;698&q; data-width=&q;960&q;&g; Elon Musk speaks onstage during SXSW. Photo by Chris Saucedo/Getty Images for SXSW

While Tesla fell short of making 2,500 Model 3&a;rsquo;s per week by the end of March, it is ramping nicely in May as production crosses 3,000 per week and seems poised to move higher. Between emails from Elon Musk to employees and detailed analysis by &l;a href=&q;; target=&q;_blank&q;&g;Model 3 Invites Spreadsheet&l;/a&g;, it looks like the company could at least come close to 5,000 per week by the end of June.

&l;p class=&q;tweet_line&q;&g;However, as Model 3 manufacturing has ramped, the stock has sold off . In just the past 9 days the stock has fallen from its recent high of $306.85 on May 9 to $276.82, or 9.8%. From the February 26 peak of $357.42 it is down 22.6% and from the all-time closing high of $385 on September 28 last year it is down 28.1%. The &l;a href=&q;;&g;shorts have been winning the game recently&l;/a&g;.

&l;strong&g;Model 3 production increasing&l;/strong&g;

In an email from Elon Musk to Tesla employees on May 2 that &l;a href=&q;; target=&q;_blank&q;&g;electrek obtained&l;/a&g; he wrote, &a;ldquo;It is looking quite likely that we will exceed 500 vehicles per day across all Model 3 production zones this week.&a;rdquo; At 3,500 plus for the week this would be a significant improvement from the 2,270 per week that was hit in April for three straight weeks.

In the same email Musk said that the Gigafactory had &a;ldquo;managed to achieve a sustained rate of over 3,000 packs per week, and actually reached a peak hour with extrapolated outward would be a rate of about 5,000 cars per week.&a;rdquo; While the 3,000 per week at the Gigafactory is less then the 3,500 per week Model 3 production, I would assume that is just a difference by using inventory battery&a;nbsp;packs that had already been produced. Not a big deal unless the Gigafactory doesn&a;rsquo;t continue to ramp in-line with the Fremont site.

There are Model 3 fans who are tracking VINs, or Vehicle Identification Numbers. One of them the, &l;a href=&q;; target=&q;_blank&q;&g;Model 3 Invites Spreadsheet&l;/a&g;, is a Google Doc which contains a tremendous amount of data. While some of its analysis is based on Model 3 buyers inputting their VIN into it, the spreadsheet also uses VIN information provided from the NHTSA, or National Highway Transportation Safety Administration. Its latest estimate has Model 3 production at 3,125 per week.


&l;img class=&q;size-full wp-image-11970&q; src=&q;; alt=&q;Model 3 production estimates&q; data-height=&q;421&q; data-width=&q;781&q;&g; Model 3 production estimates

&l;strong&g;Don&a;rsquo;t be spooked by a May plant shutdown&l;/strong&g;

Reuters &l;a href=&q;; target=&q;_blank&q;&g;reported this week&l;/a&g; that Tesla will shut down its Fremont facility from May 26 to 31. This is a planned stoppage that has been talked about by company management, so investors shouldn&a;rsquo;t get &a;ldquo;excited&a;rdquo; about it.


&l;strong&g;Stock is in a downtrend and needs to rebound soon&l;/strong&g;

There are probably multiple reasons for the stock falling. They include continued concerns about Model 3 production ramping, its gross margin failing to reach the 25% goal in 2019 since the company has &l;a href=&q;; target=&q;_blank&q;&g;hired more production people than planned&l;/a&g;, a number of recent staff departures and reorganization, &l;a href=&q;;&g;lingering apprehensions about Musk&s;s performance on the March quarter conference call&l;/a&g;, recent accidents and analysts not believing that Tesla won&a;rsquo;t need to raise cash even though Musk has been adamant that the company won&a;rsquo;t.

The following is a 3 year chart of Tesla&a;rsquo;s stock price. You will see two horizontal lines with the first being a double top in 2017 when it peaked at the all-time closing high of $385. The second one is another double top in the first quarter this year when the shares topped out around $357. These have become resistance levels.

There is a downtrend line starting from the second top in March, which was broken when the stock rallied in early May after the company announced its March quarter results. The bubble shows the recent May 9 peak of $307.

&l;img class=&q;size-full wp-image-11969&q; src=&q;; alt=&q;Tesla 3 year stock chart&q; data-height=&q;633&q; data-width=&q;1000&q;&g; Tesla 3 year stock chart

The following chart is for 5 years. What it shows are the stock&a;rsquo;s highs of $286 on September 4, 2014 and $282 on July 20, 2015, which some analysts will look at as support for the shares. Tesla&a;rsquo;s stock was holding around these levels on Wednesday and Thursday this week, but with it breaking down to $277 it needs to quickly rebound or it could have much further to fall.

&l;img class=&q;size-full wp-image-11968&q; src=&q;; alt=&q;Tesla 5 year stock chart&q; data-height=&q;633&q; data-width=&q;1000&q;&g; Tesla 5 year stock chart&l;/p&g;