Was Tesla's Rough Quarter a Hiccup or Something Worse?

In this segment of the Motley Fool Money radio show, host Chris Hill, Million Dollar Portfolio's Jason Moser and Matt Argersinger, and Total Income's Ron Gross talk about disruptive electric-car maker Tesla (NASDAQ: TSLA), which lost money last quarter in part due to the massive ramp-up in costs for its new mass-market Model 3 and the fact that production ramp was way too slow and filled with technical speed bumps. What does it all mean for the company and for its ambitiously valued stock?

A full transcript follows the video.

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This video was recorded on Nov. 3, 2017.

Chris Hill: Tesla's third quarter report featured a loss of more than $600 million and production problems of its Model 3. For more on this, we turn to the guy at the table who knows firsthand how long it takes to get a Model 3, Ron Gross.

Ron Gross: [laughs] Oh, so rude! Chris, I'm a weird contradiction with this one. I own the stock. I have a deposit in for the Model 3, and yet I think the whole thing is completely ridiculous.

Hill: You got a delay notice, right?

Gross: Yes, I just got a delay notice that my Model 3, I should think more 2019, that would be better, early 2019. As you said in the read up, it's a Model 3 production delay. There are complications with the manufacturing process, specifically the Gigafactory was having trouble with their battery manufacturing process. So, Musk's very lofty goals, he's very quick with the goals, seems to not be coming true. That pushes things out. And yet the stock doesn't really get hit that much on these things, because if you're a believer in Musk and a believer in Tesla, you just are. But at a $50 billion market cap, with GM at a $60 billion market cap and BMW at a $60 billion market cap and Ford right in line at a $50 billion market cap, it doesn't make sense to me. Tesla is not going to be the only winner of the electric car business. Everyone is moving to electric cars. I don't see how the numbers can support the valuation.

Hill: Particularly if you want a new car soon.

Gross: [laughs] Details.

Chris Hill has no position in any of the stocks mentioned. Ron Gross has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Ford and Tesla. The Motley Fool has a disclosure policy.