What happened
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The most talked-about stock in autos had a very good run in 2017: Shares of upstart Silicon Valley automaker Tesla, Inc. (NASDAQ: TSLA) ended the year at $311.35, up 45.7% from its close on the last trading day of 2016.
What drove that run-up? Tesla’s stock has always been volatile, but I think we can look to the company’s biggest news of the year for the explanation: the launch of its long-awaited Model 3 sedan.
So what
The Model 3 is Tesla’s first “affordable” entry, a compact four-door sports sedan with a starting price of $35,000. More than that, it’s the car upon which Tesla investors’ hopes are pinned, the model that could turn Tesla from a niche maker of expensive electric luxury cars to something more like a mainstream high-volume automaker.
But the road to getting the Model 3 into full production has been a bumpy one for Tesla. It’s no surprise that the stock also had a rough ride in 2017.
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There were serious concerns before the Model 3’s midyear launch: Would Tesla really be able to deliver on its promises for the car? The stock jumped after those concerns were allayed, but it’s had an up-and-down ride since as the company has visibly struggled to get its much-ballyhooed high-speed assembly line running at faster than a crawl.
Now what
Tesla began 2018 by resetting its guidance for Model 3 production: It’s now hoping to get its production line building 2,500 cars a week by the end of the first quarter and 5,000 a week by the end of the second quarter.
If it is forced to reset those goals again, that could give Tesla’s stock another rocky ride in 2018.
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John Rosevear has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.
