For better or worse, Tesla Inc (Nasdaq: TSLA) shareholders are staying loyal to visionary CEO Elon Musk. Shareholders voted down a proposal to separate Musk’s chairman and CEO positions at Tuesday evening’s shareholder meeting, and Musk doubled down on his promises that Tesla would be cash-flow positive and profitable by the third quarter.
Tesla shareholders voted down proposals that would have split the chairman and chief executive roles and replaced three long-time Tesla board members. The votes were a victory for Musk, who has faced intense scrutiny in recent quarters after Tesla has repeatedly failed to hit Model 3 production targets.
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At the meeting, Musk said it is “extremely likely” Tesla will finally hit its production target of 5,000 Model 3s per week by the end of June. Musk had originally said Tesla would be producing 5,000 Model 3s per week by the end of 2017, but that target has been bumped back twice thanks to what Tesla has called production “bottlenecks.”
“We’ve made a lot of mistakes with Model 3 production,” Musk said at the meeting. “We’re confident we know how to address them. We are addressing them.”
Musk said Model 3 weekly production rate was already at 3,500, up from 2,270 in April.
Musk also reiterated his previous claims that Tesla would be profitable and cash-flow positive by the third quarter. Tesla burned through more than $1 billion in cash in the first quarter, and several Wall Street analysts believe Tesla will need to raise additional capital by the end of the year. Tesla has repeatedly said it would not need to raise capital this year.
For Tesla investors, the outlook for the stock seems to once again come down to whether or not Musk’s word is reliable. Tesla stock is down 14.2 percent in the past year, and a number of Wall Street analysts are skeptical of Musk’s production and profitability targets.
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Needham analyst Rajvindra Gill says in a recent note to investors that Tesla isn’t likely to consistently produce 5,000 Model 3s per week for another year or so.
“Our checks indicate that Tesla probably won’t get to 2,500 per week on a sustainable basis until 3Q and we don’t foresee 5,000 per week until 2Q19,” Gill says.
Tesla stock traded higher by about 1 percent on Wednesday morning.
Needham has a “hold” rating for TSLA stock.
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Tesla Inc (TSLA) Shareholders Give Musk a Vote of Confidence originally appeared on usnews.com
