Elon Musk's vision is not for the faint of heart

Thu Feb 11, 2016 8:29pm EST
 
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By Nichola Groom

(Reuters) - Leave it to Elon Musk to make a company's stock jump nearly 5 percent a day after reporting widening losses - all in the middle of a market selloff.

Musk's electric vehicle startup, Tesla Motors Inc, on Wednesday posted its eleventh straight quarterly loss, when analysts had expected a profit. Tesla also said it planned $1.5 billion in capital spending this year but had just $1.2 billion in the bank.

Investors focused instead on Musk's promises to make Tesla profitable this year and to deliver 60 percent to 80 percent more vehicles than last year. Analysts described the forecasts as ambitious but not impossible.

It's precisely that outsized optimism that defines Musk and his appeal to the market, despite blown deadlines and long waits for profits in high-risk industries. Musk's two other ventures, SolarCity Corp and Space Exploration Technologies, also face steep challenges in cutting-edge industries.

"Investors look at Elon, and some say he's a promoter or that he steps over bounds with what he promises," said Robert W. Baird analyst Ben Kallo. "But his track record is pretty good. That's why he still attracts the type of institutional investors he does."

Still, at least six analysts slashed their price targets on Tesla shares. Kallo has a "neutral" rating on Tesla and lowered his price target to $230 from $282 on Thursday.

Tesla's stock rose 4.7 percent to $150.47 on Thursday and was among the Nasdaq's top percentage gainers in a weak overall market.

But the gain comes after steep losses so far this year. The automaker's shares are down more than 37 percent - and Musk's personal stake in Tesla has fallen by more than $3 billion.   Continued...

 
Tesla Motors CEO Elon Musk reveals a Tesla Energy battery for businesses and utility companies during an event in Hawthorne, California in this April 30, 2015, file photo.    REUTERS/Patrick T. Fallon/Files