A Morgan Stanley analyst says he is skeptical that Tesla Inc (Nasdaq: TSLA) will meet CEO Elon Musk’s target of producing 6,000 Model 3 vehicles per week by the end of June.
While Musk’s projection, made in an email to Tesla employees this week, sent TSLA stock higher by more than 3 percent, Morgan Stanley analyst Adam Jonas’s response pushed the stock back down Wednesday in a roller-coaster day on Wall Street.
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Since launching Model 3 production in the middle of 2017, Tesla has repeatedly fallen short of its own production targets. In May of 2017, Tesla said it would be delivering 5,000 Model 3s per week by the end of 2017. Instead, is produced only 793 Model 3s in the last week of the year. The company has since bumped the 5,000-vehicle target back to the end of the first quarter of 2018 and then again to the end of the second quarter. Last month, the company reported that it reached a production rate of 2,020 vehicles per week by the end of the first quarter.
On Tuesday, Musk reportedly told employees that Tesla produced 2,250 Model 3s last week but said he aims to produce 6,000 vehicles per week by the end of June.
Tesla stock has declined 17.8 percent over the past six months, and its relatively modest 1.9 percent gain on Wednesday suggests analysts aren’t the only Tesla skeptics.
“We don’t expect a 5,000-per-week run rate to be achieved before late [2018],” Jonas says.
Jonas estimates that consensus analyst expectations are now for Tesla to hit the 5,000 per-week target sometime in the third or fourth quarter of this year.
“No investor that we have spoken to expects Model 3 production of 5,000 per week by the end of [the second quarter],” Jonas says.
Bernstein analyst Toni Sacconaghi is among the Model 3 skeptics. Sacconaghi is also doubtful of Tesla’s recent claims that it will not need to raise capital in 2018.
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“Another capital raise appears likely unless Tesla’s is able to materially reign in near-term opex or capex spend,” Sacconaghi says. “Beyond the next two quarters, we believe Model 3 gross margins and build quality are the key investor controversies; we remain skeptical on both fronts.”
Morgan Stanley has an “equal-weight” rating and $376 target for Tesla. Bernstein has a “market perform” rating and $265 target for TSLA stock.
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Investors Have Given Up On Tesla Inc (TSLA) Targets originally appeared on usnews.com
