For the last couple of weeks, Tesla has been under fire. The company’s stock prices dropped and naysayers were raising questions about Tesla’s ability to deliver on its promise to mass produce its electric vehicles. Matters got worse when the company had to postpone the reveal of the new Tesla truck. The latest Tesla Silences Naysayers model is now available in the market.
However, on Monday, Tesla reported that it was able to deliver 26,150 vehicles and upgraded its delivery outlook to 100,000 vehicles for the year. The company missed its target on the Model 3, delivering 220 cars versus the expected 300 to 400. The company assured its investors that this missed target was due to bottlenecks in the production line and not with any kind of technical problem with the car. Tesla stated that it already knew where the bottleneck was and was already fixing the problem. The company did exceed expectations on their deliveries of the Model S and Model X cars.
The CEO, Elon Musk, had stated that he expected the Model 3 production at 1,500 cars by the end of the third quarter in September, and up to 5,000 by the end of 2017. He also said that he expected that company to produce 5,000 Model 3s per week by the end of 2018. This target has been a huge miss for the company and is the main reason for the drop in share prices throughout September.
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Tesla stocks gained more than 61% this year, as compared to the S&P 500, which has grown by 13% so far and the Dow, which has gained 14.5% this year. The last three months, however, have been rather rough, and the company share prices dropped by 2.4%.
Tesla Silences Naysayers
Goldman Sachs’ analysts are not impressed with the company being able to exceed the targets for the Model S and Model X cars. The main test for them was how the company would scale up the promised Model 3 production, which, according to them, has been a failure. Due to this, the firm has lowered their margins forecast to 15.5% for the third quarter. They also increased Tesla’s operating expenses to $731 million (Tesla Silences Naysayers). Furthermore, the firm gave the company a “sell” rating with a 6-month price target of $210, which is one of the lowest price targets for Tesla in the market today (40% lower than the company’s stock price on market close on Tuesday).
Morgan Stanley had a diametrically different view of the company, warning investors not to analyze the Model 3 production saga too closely and that the bigger picture should be looked at instead. They said all new products suffer teething issues and that quality should be more important that such minor issues. The firm still kept its production target at 120,000 Model 3 deliveries by the end of 2018. Morgan Stanley also kept its rating of Tesla stock at “neutral” and did not change its price target of $317 (which is about 7% lower than the company’s closing stock price on Tuesday).
Tesla did get a big boost and saw its stock prices rise to $312.78, a 1.9% rise, on Wednesday after Nomura gave its ratings for the company. Nomura is the latest analytics firm to cover Tesla stocks. The firm gave an initial rating of “buy” for Tesla, and set their price target for the company at $500, which is 44% higher that the company’s current stock price (and the highest price target among the 19 analytics firms covering Tesla). Nomura also predicted that Tesla’s annual revenues will surge from the current 2016 figure of $8 billion to a massive $58 billion by 2021.