Tesla Motors recently disclosed a third-quarter cash requirement of $1.1 billion — a red flag for investors keeping a watchful eye on the electric vehicle maker.
The company is finishing construction of a massive battery factory in Nevada, the Gigafactory, and ramping up for production next year of a mass market sedan, the Model 3. That has raised questions about how the company will raise new cash to reach its goals.
"I think they're going to go back to the market once again," said Efraim Levy, senior equity analyst at S&P Global.
Levy told CNBC's "Closing Bell" that Telsla's aggressive target date for the Model 3 release is part of CEO Elon Musk's "M-O." Levy said that Tesla's high risk tolerance and negative cash flow always leave him concerned about the valuation of its stock.
"From a technological perspective and from the dynamic of changing the industry which he does, I've been a fan of him. As far as from an investment perspective, I started off my coverage with a sell a few years ago and I've gone between sell and hold," Levy said.
Levy said he believes the majority of bulls are operating under the hypothesis that Tesla will produce positive cash flows once the Model 3 hits mass market production in 2017.
Levy characterized the assumption as high-risk and said, "I wouldn't bet on it."
"We see them continuing to be cash flow negative probably through 2018, and maybe turning positive in 2019," said Levy.
-Reuters contributed to this report.