Tesla Only Worth Half Its Share Price: Goldman

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Tesla Only Worth Half Its Share Price: Goldman

By Shoshanna Delventhal | July 5, 2017 — 5:15 PM EDT

American auto manufacturer Tesla Motors Inc. (TSLA) saw its shares plummet 7.2% on Wednesday as weaker-than-expected quarterly sales were dragged down by a production shortfall.

While investors were still digesting news that the Palo Alto, Calif.-based company would start production on the mass-market Model 3 earlier than expected, Tesla announced it had delivered 22,000 cars in the recent quarter, coming in at the low end of guidance.

Weaker-Than-Expected Q2 Production and Deliveries

Goldman analyst David Tamberrino and team responded to the pair of news by slashing Tesla’s price target to $180 from $190, compared to Wednesday close at $327.09. “We remain Sell rated on shares of TSLA where we see potential for downside as the Model 3 launch curve undershoots the company’s production targets and as 2H17 margins likely disappoint (we now forecast auto gross margin of approx. 16% vs. FactSetconsensus of approx. 24.5% from Model 3 dilution),” wrote Tamberrino.

Goldman suggests that demand for Tesla’s established production, including its Model S and Model X, appears to be plateauing slightly below a 100k annual run rate. The analysts also indicate that “cash burn should intensify” throughout 2017, though they forecast the next capital raise in 1H18.

‘More Questions Than Answers’

On the bull side, analysts at Guggenheim contend that the Model 3 launch will outweigh the lighter deliveries last quarter. The analysts reiterated a buy rating and increased their price target on TSLA to $430 from $380.

Taking a more moderate position, Bernstein’s Toni Sacconaghi and Daniel Chen suggest that “Tesla’s Q2 production and deliveries report raised more questions than answers, particularly about the Model S and Model X.” Analysts were skeptical regarding certain factors such as the timing of the release after market close on the eve of a holiday and the fact that the company left out a figure for in-transit vehicle sales. (See also: Why Tesla’s Stock May Defy The Skeptics.)

Published at Wed, 05 Jul 2017 21:15:00 +0000

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