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Tesla CEO Elon Musk.
- Tesla has a long history of dealing with crisis after crisis.
- Tesla's most recent crisis was with production of the Model 3 sedan - but it now appears that the company has stabilized its problems.
- The latest crisis was rough, but there have been others that were also challenging.
- The company's detractors could be underestimating Tesla's ability to recover from setback.
Tesla reported second-quarter earnings last week, and while the company lost more than it ever has, it also brought in a record amount of revenue.
More importantly, the company put its most recent crisis decisively behind it. As a carmaker, it's now clearly figured out how to elevate production of its Model 3 sedan, which had endured a difficult birth. At a minimum, Tesla is probably able to manufacture 2,000 per week, stretching up to 5,000.
On the PR front, CEO Elon Musk did his penance and expressed contrition for flipping out on the first-quarter earnings call when several Wall Street analyst made him mad.
The markets liked all of this, brushing off the bottom-line miss and giving Tesla a 15% improvement in its stock price. By the time the Nasdaq closed on Thursday, Tesla shares were again threatening $350. Breaking through that level, with three months to go before third-quarter results and serious questions about profitability, could send the stock on a rally toward $400, something that happened in 2017.
Hollis Johnson/Business Insider
The Model 3.
The bear thesis about Tesla - which over the first half of 2018 had pivoted to bankruptcy calculations at worst and prognostications about how much humiliation Musk would endure if he had to return to the markets to raise capital after ruling that out - is now in something of shambles.
Short-sellers have suffered real pain and have more to come if the stock doesn't retreat. Greenlight Capital's David Einhorn effectively threw in the towel prior to Tesla's earnings announcement when he admitted that his short position had contributed to an 18% loss for his fund year-to-date.
Bulls aren't going to have it easy, either. Numerous Wall Street analysts have trimmed their price-targets on Tesla and are now in the awkward position of having to take Musk's word that the profits, to this point staggering absent, will materialize in the second half of 2018.
The tricky thing about the most recent Tesla crisis is that it did have the outlines of the Big One. That's why it sucked in some much enthusiasm among naysayers, while the company's supporters had to kind of hang on for dear life. Even Musk said that Tesla couldn't bet the farm again, as it did with Model 3, and get away with it.
What the bears overlooked this time was that crisis is something that Tesla knows and knows well. The scale matters, but not as much as they assumed. So for the record, here's a look back at all the other crises Tesla has overcome in the past 15 years.
Get the latest Tesla stock price here.