Tesla’s Got the Demand, But the Real Question Remains: Can It Deliver?

Tesla Inc (NASDAQ:TSLA) may have some volatility at play, but if investors are in it for the long game, tech expert Gene Munster – offering his stance from his research-driven, venture capital firm Loup Ventures – expects six years from now there will be a big pay-off.

Munster underscores, “We’re believers that Tesla will play a central role in two upcoming paradigm shifts: 1) EV and autonomous transportation, and 2) renewable energy – driven by Tesla’s core competencies in AI and robotics. We believe patient shareholders will be rewarded and expect 2023 to be a breakout year for the company.”

“Shares of Tesla fluctuate based on timelines; […] We expect continued fluctuations in timing over the next five years, and believe shares of Tesla will have dramatic moves (both down and up) around those timing announcements. Despite this expected volatility, we remain confident in the themes that we are laying out, and that Tesla will be a catalyst and a beneficiary of the paradigm shift to both EV and autonomy. We see the quarter-to-quarter timing as less important than the bigger picture of Tesla’s role in this next wave,” predicts Munster.

Moving forward, the research analyst bets on the electric car giant’s mass-market Model 3, believing demand is more than “sufficient.” That is not the underlying obstacle for CEO Elon Musk’s brainchild, from Munster’s wise eyes. The query in whether Tesla can deliver beyond 300,000 vehicles by next year is a question of production more than anything else. Can Musk’s giant produce 300,000 plus vehicles in a year’s time? “In other words, the demand is there, and the ball is in Tesla’s court to deliver.” Munster says yes, looking for profitability to hit by 2021 and hit a 30% gross margin by 2022.

TipRanks analytics demonstrate TSLA as a Hold. Out of 15 analysts polled by TipRanks in the last 3 months, 3 are bullish on Tesla stock, 8 remain sidelined, and 4 are bearish on the stock. With a loss potential of nearly 17%, the stock’s consensus target price stands at $279.33.

Twitter Has a Visibility Problem

Twitter Inc (NYSE:TWTR) shares are taking a 14% nosedive today on back of a second-quarter print that may have revealed revenue and EBITDA edging out expectations, but a weak spot in terms of audience growth. Top analyst Michael Graham at Canaccord is wary that even though revenue dips seem to be improving, there remains a significant headwind lingering in the back half of the year.

In reaction, the analyst reiterates a Hold rating on TWTR with a price target of $15, which represents a just under 10% increase from where the stock is currently trading.

Though monthly active user (MAU) growth rose 5% year-over-year, this marks a waning considering last quarter indicated 6% growth. Daily active user (DAU) growth fared “better,” rising 12% year-over-year, but still marking a slow-down of the 14% exhibited in the first quarter. The analyst pinpoints, “Daily usage still solid, but lacking visibility.”

Graham surmises, “Twitter reported revenue and EBITDA above expectations, but audience growth remained sluggish. DAU growth was 12% (outpacing MAU growth of 5%), still in double digits, but down from 14% in Q1. Though there were several notable achievements in signing new live premium video partnerships in the quarter, the strength in video is still being masked by revenue headwinds from de-emphasized ad units. H2 will continue to face pressure on the top line, though the company has been able to expand EBITDA margin with R&D and S&M savings. While the DAU growth is a relative bright spot, we still think it will take at least until the beginning of 2018 for Twitter’s business to solidify. We note that guidance, however, appears conservative, and this could help provide some support for the stock in the near term.”

Michael Graham has a very good TipRanks score with a 63% success rate and a high ranking of #81 out of 4,160 analysts. Graham yields 14.7% in his annual returns. However, when recommending TWTR, Graham forfeits 33.3% in average profits on the stock.

TipRanks analytics reveal TWTR as a Hold. Based on 15 analysts polled by TipRanks in the last 3 months, 2 rate a Buy on Twitter stock, 9 maintain a Hold, while 4 issue a Sell on the stock. The 12-month average price target stands at $16.17, marking a nearly 5% downside from current levels.