Tomahawk, WI 11/06/2013 (BasicsMedia) – Tesla Motors Inc (NASDAQ:TSLA) didn’t impress with its Q3 data. Thought it managed to report above Wall Street and smashed own estimate, investors had hoped for some really big figures. Because of this, sell off dominated the electric carmaker’s stock in the after hours trading on NASDAQ. For the first time in as many months, the stock went down by as much as 12%, offering some sort of reality check to investors.

The rising expectations on the company have seen the stock soaring. So when the company reported not-so-good data and again said that its fourth quarter wouldn’t be any different from the third one, investor-confidence deflated. But was the reaction over Tesla lower-than-expected data justified? Without looking at the fundamentals, it could well seem justified, but after seeing what the company is doing and where it has set its eyes on the horizon, such hasty reactions to sell off the stock seem unjustified. Perhaps before going far it is important to know that Tesla is a young automaker, and already its stock price is well above most of the mainstream auto companies.  It is not without reason that this is so; the fact is that Tesla has a future.

Tesla cars resonate well with the wealthiest

To begin with, the company is already leading the new car registration in the wealthiest pockets of California. The wealthiest set the sales tempo for luxury cars and as evidenced by the recent study, Tesla has got into the heart of the nation’s elite and this makes a lot of business sense.

Another strength that that Tesla does have against the competition is that it sells its cars directly in a number of states now after obtaining special auto dealer license which allows it to own dealer shops. Under this arrangement, customers coming for Tesla’s high-end cars are able to acquire information about the cars from insiders who know everything about the automotives.

If that is not enough, Tesla has also partnered with 4G network providers to supply its cars with connectivity. This makes the Tesla cars look more like smartphones on the wheel. Perhaps it should be remember that in upping its game in the design segment, Tesla hired an executive from Apple Inc to head its design division. This move further means that the company is committed to providing its customers with experience that is out of the ordinary inside its next generation cars.

Research and development expenditure cost Tesla in Q3

But more importantly, Tesla failed to excite with its figures because it is committing a lot of funds in research and development. The company is developing its retail stores and battery charging stations. The company is also building a stream of lithium-ion battery cells that would ensure that its production is not constrained due to low battery supply.

To better understand why Tesla is yet to reveal its true self, one should see that the company is actually constrained by production, rather than demand. This essentially means that its devices on wheels are ticking on the market. Tesla’s backlog of orders from Europe and China are also telling of its bright future.

The company reported revenue of $431 million and loss of $38 million in the three months quarter ending Sept. 30. This compares to revenue of $50 million and loss of $111 million the same quarter a year ago.

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