Is Tesla's stock peak temporary?

Analysis do believe that Tesla's stock is likely to lose its shine amidst lousy earnings of the company

Since February, Tesla stock had a modest momentum and the stock soared following the news that the highly anticipated electric car Model 3 has garnered the reservation of around 400,000 units. But, several analysts believe that the stock’s peak was temporary and slowly it will lose its shine.

Model 3 has come along the tagline of “affordable.” Marked at a price of $35,000 the electric car is reasonably affordable for everyone save Tesla.

For every Model S sedan, the Palo Alto Calif. firm loses over $4,000 and the model cost ranges between $70k and $108k. Therefore, it can be easily assumed that the Model 3 $35,000 price tag is not likely to solve the company’s financial deficit.

The income statement of the auto-tech giant has revealed that the company’s cash has been draining away at a very fast pace. Also, according to TheStreet Ratings, the company has net profit margin of -26.38% and a quick ratio of 0.49 –meaning that for every current liability of $1, the company has the ability to pay back only 49 cents.

Keeping aside the deepening worse side of Tesla’s cash flow and earnings, the automaker is significantly overvalued as compared to its competitors. The market cap on the Silicon-Valley auto-tech giant is over $30 billion which is substantially higher than Ferrari’s $8 billion and Fiat Chrysler’s $10 billion. To be valued at least thrice the value of FCAU –which is more profitable and established company –seems unreasonable and a bit exaggerated. The annual sales of FCAU close at $130 billion whereas the Palo Alto, Calif. firm generates revenue of mere $4 billion.

Moreover, the luxury electric car maker’s market capitalization is approximately two-thirds of General Motors’. This is regardless of the fact that historically German Motors sell 10 million cars annually at a profit while Tesla, last year, sold below 100,000 cars and that too at a loss.

Bob Lutz, former GM executive expressed the following in an interview with CNBC, “[Tesla] costs have always been higher than their revenue… They always have to get more capital. Then they burn through it.”

Mr. Lutz pointed out that since the fall in the oil prices, the demand for electric vehicles have slowed down a bit. Additionally, the competition in the electric car market has been growing rapidly with many established manufacturers entering into the domain of electric cars. In the next few years, Apple might reveal its long awaited electric car. Moreover, in the current year, rival GM’s Chevy Bolt is expected to come out.

Therefore, Tesla’s stock is likely to lose its ability to stand at top. As of now, at the market which closed on Tuesday, Tesla Motors Inc. stock stood at a price of $232.32.

Apple Inc. Ends Talks With Daimler

The tech giant has been having talks with the German automakers over the production of its secret electric car

According to German news site Handelsblatt, Daimler and BMW have ended the negotiations with Apple Inc. over the rumored electric car, dubbed as Project Titan. Although the tech giant hasn’t openly admitted about developing an electric car however the sources close to the matter has hinted about the ongoing project every now and then.

The tech giant had needed a reliable partner for working on the anticipated project of self-autonomous car and that is why it had been having talks with the German automaker giants. However, the negotiations ended in a deadlock over few disagreements between the automakers and the tech titan.

The disagreement sprung over the control of power and data. Where Apple wanted the vehicle to be built into its own cloud software, the German automakers had strong stance regarding the customers’ data protection.

Last year, representatives of Apple had visited BMW’s headquarters –situated in Munich –to tour the company’s factory –situated in Leipzig –to look at the procedures involved in creating the company’s i3 electric car. It was rumored then that the iPhone maker intended to use BMW i3 as the premise for its electric car project. But, subsequently, within few months, the Silicon Valley tech titan and BMW talks decelerated. Whereas, Daimler –the company involved in manufacturing the prestigious Mercedes-Benz –ended most recently.

Apple has not officially announced anything regarding this current ongoing process. But the company’s executives have never denied the possibility of an electric car. In fact, when the tech giant’s core product’s, iPhone, sales declined, the company urged the investors and analysts that it has other plans of generating the revenue. On Apple’s 40^th anniversary, Apple’s co-founder Steve Wozniak, in an interview to CNBC, had expressed that although the market for smartphones have been saturated the company can come a long way by adopting to the new technologies which include augmented and virtual reality and self-autonomous cars.

Moreover, Magna –a Canadian-Australian-based automotive manufacturer is actively involved in the development of Apple’s car. Rumors have it that few of the executives from Apple have visited Austria to hold talks with Magna Steyr and up till no such news of the talks getting disrupted have been come to the surface.

According to Frankfurter Allgemeine –a German publication –the Cupertino, Calif. firm has established a “secret lab” in Berlin where it has hired a small team of around 15-20 engineers who had previously worked in German car companies. Additionally, hundreds of employees in California as well are secretly working on the project.

The tech leviathan has also been searching for the car executives in the US as well. Recently, it poached former vice president of Tesla’s vehicle engineering, Chris Porritt. The move came after around four months the departure of Steve Zadesky from the company who had once been leading the Project Titan. When Zadesky was departing, sources familiar to the matter has said that the head was under immense pressure of speeding up the project which apparently couldn’t be completed in the given deadline. The tech giant is said to complete the project in 2019 or 2020.

Tesla Loses Key Asset For Autopilot to Alphabet

The auto making company is currently experiencing a loss in the form of a value engineer that it has lost to its rival recently

Tesla Motors is repeatedly being faced with the same problem in the auto car industry, due to which it has been raising concerns of the investors in the business. The giant has made a name for itself in the auto industry and has secured the top most position in the electric car making business, but there are some issues that it is constantly facing which might now be taking their toll on the giant. According to the latest report, the hybrid car makers have shown a highly slow speed in the production of its new car in line, the Model X. It has received a considerable number  of orders for the vehicle already, which also showed the attention it managed to attract since its official launch, but there is one thing that the Californian company seems be lagging behind in.

As per reports, Tesla cars are being produced and manufactured in a very dragging speed and have clearly been testing the customers’ patience. Analysts believe that even though the company has shown that it can make great sales of its hybrid cars without much problem, it certainly has failed to prove its efficiency in a faster and better production of vehicles. On the other hand, the number of problems seems to be increasing very quickly as a recent report informed that rival Alphabet has taken away Robert Rose from the smart car making company, who is an engineer was working on the autopilot feature installed in the cars.

The autopilot feature turned heads towards the Tesla cars in a huge number and made the sentiments of investors soar high following the announcements and show put up by the management of the feature in particular. However, as per a report by 9 to 5 Google, the person who was backing up the idea in the luxury car making company has now been taken away by the search engine rival which has created much of an unexpected stir in the market.

Tesla has already been facing issues is carrying out a more civilized business mainly due to ups and downs in the operations and hiring of better and more qualified engineers for the giant, which is why this news has come off as a huge blow to the giant as it has actually lost a valuable asset to its already very strong rival which might not be what the company was really looking for at this time of need.