The announcement Tuesday that it was producing its Model 3 vehicles at a rate of a little more than 2,000 cars per week at the end of March fell short of its target output of 2,500 a week.
In the past week, the company built 2,020 Model 3s and expects to produce another 2,000 Model 3s this week as well as 2,000 Model S and X vehicles.
For Tesla Inc. investors, the question isn't whether Elon Musk will meet his diminished target this week for Model 3 vehicle production. But Tesla needs to keep its eye on the prize and continue ramping up Model 3 production over the next few months. Based on anticipated production growth, Tesla said it does not need to raise more capital or increase its debt at this time.
Its share price, which had dropped by more than a third in six months on fears for the firm's future, rallied on Tuesday by 7% after news of the higher production rate.
This story will be updated.
Bulls can point to record vehicle production in the quarter. However, he cautions that concerns about production milestones not being met could make raising cash even more hard for Tesla. As a result, the company expects to be building approximately 5,000 units per week in about three month.
Musk himself has taken direct control of Model 3 production and the company says it already has about 500,000 advance reservations from customers for the vehicle.
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"Progress is the first word that comes to mind after reading the first-quarter delivery report", Nomura analyst Romit Shah said. Tesla is under enormous pressure from shareholders to build enough Model 3's to both meet demand from customers and earn enough in revenue to help offset the billions spent preparing for Tesla's Model 3 rollout.
As of Monday, April 2, Tesla shares were at $254, which was down 4.4 percent.
The company dispelled concerns by some analysts predicting that the company would fall into a cash squeeze arising from its production troubles.
The rate of 5,000 sedans a week by end of second quarter is "looking doable", they said.
"Maybe Elon Musk switched staff from Model S and X to Model 3 to get better production numbers for Model 3", NORD/LB analyst Frank Schwope said. These vehicles will be counted toward Tesla's second quarter delivery totals.
The results are a bit of a mixed bag for Tesla.
Amazon also pushed higher, winning 1.5 per cent as investors greeted headlines that suggested President Donald Trump did not plan to follow up a series of irate tweets with concrete action against the company.
Note that Quigg's trade would be "in the money" only if Tesla declines another 60% from today's levels, so it is very much a worst-case-scenario hedge.