Tesla will report on its fourth quarter after the closing bell Wednesday.
Goodwill for the electric vehicle maker is close to running out as it prepares to release its fourth-quarter earnings report, says Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management.
"Tesla is one of those stocks that succeeds in being poetic but really fails miserably at being prosaic," Schlossberg said on CNBC's "Trading Nation" on Tuesday. "Time is really coming up for Tesla now where Wall Street is no longer going to be buying their dreams."
The electronic vehicle producer has consistently posted losses for years as it ramps up production. Investors have generally given the company room to breathe, instead taking heart from strong demand for its latest model Model 3 and its reputation as an innovator in the auto market.
Tesla has not posted a quarterly profit since its September 2016 quarter, and even then, it was only its second since March 2013. Total operating costs ballooned 80 percent in the nine months to last September. Research and development costs totaled just over $1 billion during that period, up 74 percent from a year earlier and comprising just over one-third of total expenses.
To make up for a disappointing bottom line, the company has posted year-on-year sales growth in every quarter since September 2012.
Investors in Tesla generally rely on production numbers instead of the income statement as a gauge for the company's success. Tesla previously targeted a production rate of 2,500 Model 3s per week by the end of the first quarter and double that in the second. In its third-quarter release, management said net orders for the Model S and X in the three months to September should translate to record deliveries in the fourth quarter.
A number of analysts have already raised concerns that Tesla will not hit its production and deliveries targets. KeyBanc said that checks on the Model 3 delivery ramp remain slow and that it has now lowered its deliveries estimate to 8,500 from 13,000 for the first quarter. Goldman Sachs has also raised doubts over the pace of production growth.
Kim Forrest, senior equity analyst at Fort Pitt Capital, has also expressed doubts over whether Tesla can deliver in its fourth quarter.
"I'm a show-me investor," Forrest said Tuesday on "Trading Nation." "They have shown me that they can dream big and sometimes achieve, but they need to make that mark way more frequently and more robustly. The problems they've had with the Model 3 are just representative as what I've come to see as inherent in Tesla."
One problem for Tesla is that even though sales continue to climb, its escalating costs require it to rely on outside capital. That income stream could be drying up.
"They need to go to the market and raise more capital to expand their business production and I don't think any of that is going to be nearly as easy as it used to be," said Schlossberg.
Tesla ended the third quarter with a $3.5 billion cash balance. The company raised $546 million in bonds backed by auto leases at the beginning of February.
Analysts surveyed by FactSet anticipate a fourth-quarter loss of $3.11 a share, more than four times the loss a year earlier. Sales are expected to climb 44 percent to $3.3 billion.