Tesla Inc (TSLA) Has More Trouble Than Anyone Thought
Tesla Inc (Nasdaq: TSLA) stock was down 3 percent in pre-market trading on Thursday after the company came up well short of dialed-down Wall Street expectations for production of its highly sought Model 3.
Tesla reported after the market closed on Wednesday that it delivered 1,550 Model 3 vehicles in the quarter, less than half of the consensus analyst estimate of 4,100 vehicles.
After missing yet another Model 3 target, the company once again blamed production bottlenecks for its low numbers. Tesla CEO Elon Musk had previously said the company would be producing Model 3 vehicles at a rate of 5,000 vehicles per week by the end of 2017. Last quarter, the company bumped that target back to late in the first quarter of this year. On Wednesday, Tesla bumped that 5,000-per-week target back once again.
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"As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time, we expect to have a slightly more gradual ramp through Q1, likely ending the quarter at a weekly rate of about 2,500 Model 3 vehicles," the company says in a statement. "We intend to achieve the 5,000 per week milestone by the end of Q2."
To add insult to injury for Tesla investors, General Motors Co. ( GM) on Tuesday reported that it sold more than 3,000 electric Chevy Bolts in December and 23,297 total Bolts in 2017.
Tesla's 1,550 Model 3 deliveries in the fourth quarter fell well short of even the most conservative Wall Street estimates. Just weeks ago, analysts had been expecting 5,200 vehicle deliveries on the quarter. Last week, Loup Ventures dialed its estimate down to 2,500 vehicles. On Tuesday, Tesla bear and Cowen analyst Jeffrey Osborne cut his estimate to 2,250, a number which still turned out to be too optimistic.
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"We still are convinced that investors aren't fully acknowledging the competitive threat that is growing in 2018 and 2019 in the [electronic vehicle] segment, and the cash burn that Tesla will experience in the coming years," Osborne says.
Even Loup Venture analyst and Tesla bull Gene Munster says that the Model 3 now likely won't have its "breakout year" until 2019 at the earliest.
Cowen has an "underperform" rating and $170 price target for TSLA stock.
Wayne Duggan is a freelance investment strategy reporter with a focus on energy and emerging market stocks. He has a degree in brain and cognitive sciences from the Massachusetts Institute of Technology and specializes in the psychological challenges of investing. He is a senior financial market reporter for Benzinga and has contributed financial market analysis to Motley Fool, Seeking Alpha and InvestorPlace. He is also the author of the book "Beating Wall Street With Common Sense," which focuses on the practical strategies he has used to outperform the stock market. You can follow him on Twitter @DugganSense, check out his latest content at tradingcommonsense.com or email him at wpd@tradingcommonsense.com.
