Tesla Stock Analysis: Model 3 In The Horizon

The article was written by Linda Luo, a Financial Analyst at I Know First.

TSLA Stock Analysis


  • Q1 financials show robust revenue growth
  • Tesla’s expansion plans and new products – opportunities for profitability?
  • I Know First Algorithm Bullish Forecast For TSLA

Tesla Stock Analysis

Q1 Financial Results 

Tesla released its financial results for the first quarter of 2017, boasting a record revenue of $2.7 billion. This surpassed Wall Street’s expectations of $2.5 billion. Despite its revenue more than doubling from a year ago, Tesla also reported a loss of $1.33 per share. However, this fell below analysts’ expectation of $0.81 loss per share. The drastic increase in revenue is driven by the boost in sales. Tesla boasted a record of 25,051 deliveries for the first quarter, up 64% from last year. However, the robust revenue growth is offset by Tesla’s operating costs due to its ambitious expansion and R&D plans, particularly its $2.6 billion SolarCity acquisition and the construction of its Gigafactory, a $6 billion battery factory.

Opportunity for Profits 

Some analysts see Tesla’s robust revenue growth as a positive indicator for expansion and future profitability. In contrast, some worry that Tesla’s losses will never turn into profit. However, Model 3 may be the opportunity for Tesla to turn its net losses around. In particular, the company stated that it will adhere to its plan to begin production of its first mass-market vehicle, Model 3, in July. The Model 3, a $35,000 electric sedan marketed as an affordable car, is at the crux of Tesla’s expansion plans and direction towards profitability in the long run. This vehicle was designed as an affordable electric car for the mass market. Furthermore, Model 3 is an opportunity for Tesla to expand its customer base outside its niche in the luxury car market. Enthusiasm for Model 3’s launch has driven up Tesla’s stock to record highs. As a result, this pushed the company’s market capitalization above Ford and General Motors.

In April, Tesla’s stock surged 12.9%, continuing its long term upward trend from the beginning of the year. Tesla had announced that it will expand its charging network of about 5,400 Superchargers to over 10,000 Superchargers by the end of 2017. This will be in preparation for its Model 3 launch. Tesla has also voiced plans of beginning the construction of 2 or 3 more Gigafactories by the end of 2017. The company may build these Gigafactories overseas for global expansion. In addition, Tesla has made progress with its vertical integration plan through its acquisition of SolarCity, with its recent sales of its new solar roofs. Furthermore, Elon Musk has been fostering anticipation for the Tesla Semi Truck, set to unveil in September.


Tesla Stock AnalysisOverall, anticipation of Tesla’s new products and results of its aggressive expansion strategy has been driving Tesla’s stock up. Surpassing first quarter revenue expectations is a good sign for Tesla amid its Model 3 launch and plans to ramp up production to 500,000 vehicles by the end of 2018. Eyes are on the Model 3 as its success will be crucial to Tesla’s business growth. In the face of increasing competition from automobile manufacturers more well-capitalized to produce their own electric vehicles, Tesla seeks to increase market share in this competitive industry.

I Know First Algorithm Bullish Forecast For TSLA

I Know First currently maintains a bullish stance on TSLA with signal strength 209.64 and predictability 0.58 for the 1-year forecast.

Tesla Stock Analysis

Past I Know First Forecast Successes with TSLA:

In such as the one dated on January 8, 2017 the algorithm accurately forecast a signal for Tesla.  Almost half a year since the article was published, the stock rose impressively by 48.4%, beating the S&P 500 return of 7.46%.  The market premium calculates to an astounding 40.93%.

Tesla Stock Analysis

This bullish forecast on TSLA sent to the current I Know First subscribers on January 8, 2017.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go. (positive = to go up = Long, negative = to drop = Short position). The signal strength relates to the magnitude of the expected return. We use the signal strength for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. It allows the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.