Tesla Stock Rises as Musk Looks to Cut Costs (TSLA, SCTY）

By Richard Saintvilus | September 6, 2016 — 8:54 PM EDT

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After several weeks of declines, shares of Tesla Motors, Inc. (TSLA) drove higher Tuesday on reports that CEO is looking for ways to lower costs of the electric-car manufacturer. Tesla's high cash burn rate, compounded by its recent acquisition of money-losing SolarCity Corporation (SCTY) remains a sore spot for investors.

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However, Musk is pushing employees to cut costs. In an email to employees on August 29, Musk said that building and delivering the maximum number of cars possible in the next 4.5 weeks, while trimming costs, is a must if the company is to have a good Q3. The CEO said that the company will be in a 'far better position to convince potential investors' to bet on it if Tesla is able to achieve profitability.

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But how much of this new conservatism regarding spending will achieve this goal? More importantly, is it in Tesla's best interest to cut spending now and risk missing its aggressive production targets? These are the questions analysts have begun to weigh. Last week, analysts said investors should buy Tesla shares amid their recent decline.

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The stock has fallen 12% over the past month and 8% over the past three months, thanks to its pending deal for SolarCity. Looking ahead, Tesla is expected to deliver 3 cents per share on revenue of $2.25 billion in the quarter that ends September. For the full year, ending December, the company is projected to lose 84 cents per share, while revenue of $8.13 billion would mark a 54% rise from the year-ago quarter.

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Tesla shares have declined 15% year-to-date, while falling 16% over the past twelve months, trailing the S&P 500 (SPX) index during both spans. The stock has a consensus hold rating and an average analyst 12-month price target of $240, implying an 18% rise from current levels.