It was just previously that the Chief Executive of Tesla Inc (NASDAQ:TSLA) Elon Musk made a huge purchase of the company’s stock. The move came about with a huge impact considering that the shares of the company scaled higher on Thursday.

Johnson’s perspectives regarding latest developments

There are numerous debates surrounding the matter with a group of people taking the stand that it is not a wise investment. Vertical Group’s Gordon Johnson has spoken elaborately regarding the share losses and the cancellation rates that have all along made him pretty cautious on the stock.

In giving his estimation of the Model 3 cancellation rate, the official outlined a figure of about 66% which is quite high. He disclosed that out of the 582,000 early reservations for the vehicle, the only ones that translated into sales in the long run were 197,000.

In his writing, he made it clear that the Model 3 cars went up by a “dismal” 5,000 units and that was of course over a timeframe of about 8 months from July 31, 2017, to May 2, 2018 and that was representative of almost 139 cars on a weekly basis.

Further analysis


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There are two explanations that are being forwarded at the moment, one of them being that the new reservations virtually disappeared whereas the other has to do with the spiking up of the cancellation rates of Model 3 from March 31, 2016, to April 30, 2016.

Johnson is looking at the latest developments as some sort of bad news to Tesla and a number of analysts share similar views.

Taking for instance that the company hit the production target of 5,000 cars a week in the second quarter, and then it is reasonable to conclude that by the first quarter of next year the company might have exhausted all its preorders.

In his argument, Johnson outlined that the investors will most probably end up questioning the logic behind valuing Tesla as a growth stock. That is regardless of the point that they understand Musk will be using the one-time items in his efforts to make a profit in the second quarter of this particular year.