Personal Finance

Symbol: TSLA

Share price: $345.25

Market capitalization: $57.7 billion

52-week range: $178.19 – $389.61

Year-to-date return: 61.6%

Estimated 2017 earnings: – $7.46

Estimated 2018 earnings: – $0.78

Price-earnings ratio: Not meaningful

Tesla has had plenty to celebrate this year. In July, the company finally launched its first mass-market sedan, the Model 3, to rave reviews, after years of anticipation. The following month Tesla announced it had completed its first solar-roof installations (those are roofs made with solar-cell shingles, and differ from conventional solar panels, which sit atop a traditional roof). CEO Elon Musk says Tesla will unveil its first battery-powered semi-truck in October. With the stock up 61.6% so far this year, Tesla’s investors are surely celebrating too.

But all that jubilation has yet to translate into positive cash flow or profits. The company burned through more than $1 billion in cash during the second quarter this year, and will continue to need huge amounts of cash to finance the battery factories it is building and development of new products. The company raised almost $2 billion in a debt offering in August, but will almost certainly have to sell more shares or debt to keep up with its titanic ambitions.

Efraim Levy, who covers the stock for CFRA Research, likes the company’s long-term prospects, but says that even awarding Tesla an ultra-premium valuation doesn’t justify the current share price. “The stock price has gone up even as the consensus of analysts’ expectations has weakened and losses have widened,” he says. “Even if things go right, you’re paying a lot up front for future potential.”

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