Tesla stock has long been appraised as a “future asset,” a stock that has future potential to shift the energy and automotive industries. What seems to be interesting is that Tesla (TSLA) is being traded at a price that already assumes it is delivering on its promises. Stocks like these tend to have ridiculous P/E ratios (price to earnings). Currently, its PE ratio is fluctuating around negative 72 and 73. Ratios this high are something to be warned of.

Its price to earnings ratio is negative all due to the cash burn rate of Tesla. Tesla burned through $1.16 billion to produce its Model 3, a record burn rate in the second quarter of 2017. It seems to be that Elon is putting all of his “eggs into one basket” when it comes to the Model 3 - including all of its cash and resources.

If Elon doesn’t deliver on his promise to provide a:

1. Luxurious

2. Technologically advanced

3. Relatively economical

electric vehicle, then Tesla can expect some heat from the media. Currently it seems as if Tesla has fulfilled its promise of reaching all the deliverables during its Model 3 Handover Event. The press was supposedly excited to see what Tesla had accomplished with the Model 3 and moreso proud of all that it has done in the last few years.

But here comes my main problem with Tesla. From the get-go I supported Tesla and its efforts in seeking to accomplish the “impossible.” Yet, what struck me was the media’s portrayal of Tesla’s advances as if they were immune to any complications. Yet time and time again, Tesla had sunken into issues.

In my eyes, the most imminent hurdle for Tesla is its reliability and production reports. The reason I think this way can be dated back to the Model S Consumer Reports disaster. When all of the original line of Model S’s were facing huge issues with their buyers, the stock dipped but we forgot. We forgot again when Tesla didn’t deliver on its promise in delivering the Model X in time, but where is the Model X? And we’re going to keep forgetting if we don’t recognize that there have been considerable problems in Tesla’s delivery to the public.

Well now the game has changed. Tesla is facing more than 500,000 pre-orders of a car nobody has test driven and nobody has any idea of what it completely looks like - a surprising amount of trust, right?

Tesla is competing with giants. It’s respectable to see what they are doing, but it's foolish to assume there will not be production issues. BMW (BMWYY), Audi (VLKAF), and Mercedes-Benz (DDAIF) have existed for ten times longer than Tesla. Their production lines are near flawless, extremely reliable, and completely coordinated. I can’t say the same about Tesla as they have barely been able to put 80,000 vehicles on the market in 2016 where BMW and Mercedes-Benz put out hundreds of thousands of cars every year.

In the long run, I hope Tesla succeeds and grows beyond all expectations but I will not be imprudent in outlining Tesla’s abilities. Doing so can pump and dump the stock which is not as healthy as rigid, and slow, growth.