As Tesla Inc (ticker: TSLA) approaches the most critical time in the company’s history, bears are as skeptical as ever that the upcoming Model 3 will live up to the hype. On Wednesday, Goldman Sachs analyst David Tamberrino suggested Tesla investors could be in for some pain.
Tesla’s eventful week started Sunday when CEO Elon Musk tweeted that the Model 3 “passed all regulatory requirements for production two weeks ahead of schedule” and that the first Model 3 will be completed on Friday.
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TSLA investors enjoyed a short-lived celebration. On Monday, Tesla reported a second-quarter delivery of only 22,000 vehicles, down from a record 25,000 deliveries in the first quarter and well short of consensus Wall Street estimates for 24,200.
On Wednesday, things got even worse for Tesla investors when Goldman lowered its six-month price target for Tesla stock from $190 to $180, sending Tesla shares down another 7.2 percent on the day.
Tamberrino says demand for Tesla’s Model S and Model X is plateauing and Tesla will have a difficult time hitting its Model 3 targets.
“We believe the excess production above deliveries, the discontinued ‘order rate’ metrics, and the company’s [second-half 2017] guidance … in combination with the past four quarters of delivery results point to a plateauing of demand for its current products,” Tamberrino writes.
While the “soft launch” of Model 3 production is coming ahead of schedule, Tamberrino says Tesla’s track record of falling short of targets doesn’t bode well for Model 3 delivery in the quarters ahead.
“Overall, we still harbor supply chain concerns and believe a more prudent curve is warranted given historical operational execution,” Tamberrino writes.
To make matters worse, Goldman says cash burn is likely to increase in the second half of the year, requiring Tesla to once again raise additional capital sometime in the first half of 2018.
This year has been good to TSLA stock: Even after Wednesday’s selloff, shares were up more than 50 percent year-to-date. But according to Goldman, a reversal of fortune could be in order, as the $180 price target suggests Tesla shares could fall 45 percent from Wednesday’s closing price — all by early 2018.
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For now, bulls and bears will be watching to see if Tesla can hit its production targets. Musk has scheduled a “handover party” to deliver the first 30 Model 3 vehicles to customers on July 28. He has also said Tesla expects to produce 100 Model 3s in August, more than 1,500 in September and 20,000 per month by year’s end.
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Tesla (TSLA) Stock Dips on Ominous Analyst Note originally appeared on usnews.com
