Would you buy, or stay out?

Tesla is a young electric-car maker that began shipping its first mass-market luxury sedan, the Model S, in June 2012. Its most recent full year (2012) lost nearly as much money as it earned in revenue, but the Model S is ramping fast and reviews are glowing. A month ago Tesla told investors that the just-finished quarter would be its first-ever profit. It is also one of the most heavily bet-against stocks on the market.

• •The ramp is working. Revenue doubled to $413 million in 2012 as the Model S reached a 20,000-cars-a-year production rate, and on April 1 Tesla pre-announced that deliveries beat plan and the quarter would be its first profitable one ever. The milestone looks all but confirmed — the market already knows it is coming.
• •But the quality of that profit is the question. Tesla lost $396 million in 2012, still burns cash, and owes the government a loan. A meaningful slice of its results comes from selling regulatory credits to other carmakers rather than from the cars themselves — so a first profit may say less about the business than the headline suggests.
• •Opinion is violently split. Tesla is one of the most shorted stocks in the market — a large crowd is betting it fails — and with no annual profit there is no P/E to lean on. At $53 you are paying for a mass-market future (a car for the rest of us) that is years away and far from guaranteed, and the stock has already jumped on the good news.