Tesla’s Cost-Appealing Model 3 Is Going to Make Consumers Happy
Tesla Inc (NASDAQ:TSLA) shares dipped 3% yesterday, with shareholders keeping attention rapt to tomorrow- when the electric car giant’s second-quarter financial results are delivered. However, thought CEO Elon Musk’s mass-market Model 3 has not been unveiled quite yet, the giant’s story remains one heavily revolving around what will become of the company’s most cost-friendly model yet.
Yesterday, Musk hosted a “hand-off” event- one where 30 choice employees received production-ready automobiles before the Model 3’s official launch date. Though Musk acknowledges this is no small undertaking to mass-produce a vehicle quite like this one, particularly assessing the supply chain to be a labyrinth of layers, he appreciates the loyalty of Tesla enthusiasts.
Gene Munster – offering a slice of his tech thoughts from his research-driven, venture capital firm Loup Ventures – places great importance on the Model 3 as the utmost “catalyst to the world’s adoption of EV and autonomous driving,” going as far as to wager, “And we expect it to play a big role in commercializing and consumerizing AI and robotics technologies.”
Following the Model 3 “hand-off” event, the research analyst comes away mostly bullish, with just one “disappointment” at bay. First, Munster notes demand has him encouraged, considering, “Demand for Model 3 is strong despite under selling.” This past Friday, the giant disclosed well past 500,000 preorders for the Model 3 are already circulating, which is a healthy boost from the 373,000 reservations that shot up six weeks following the first preview of the Model 3 last March. The company’s current momentum aligns with Munster’s expectations, but even so, the analyst finds “[…] the number is impressive given that there has been little to no Model 3 advertising. In addition, Tesla has been ‘anti-selling’ the Model 3, and hasn’t even had vehicles available to test drive until Friday night.”
With regard to the production ramp, though the timing is not as quick as the majority forecasts, Munster remains wholly unfazed, calling for 6,000 Model 3 vehicles this coming December, 308,000 by next year, with 373,000 in just three years. Even if “It’s going to take longer to ramp deliveries,” Munster envisions a “breakout” 2023 for Musk, where deliveries will surge to 1.6 million, breaking past the hundreds of thousands mark projected for 2020.
Even if the analyst estimates ASPs will climb, he anticipates the captivated interest in both the long-range model as well as the Enhanced Autopilot will not throw delivery expectations off track in the end- even if Munster is now looking for $50,000 in ASP through the end of next year. Likewise, cannibalization is “favorable,” as the ideal Model S consumer is not the same as the one that would spring for the Model 3, one that makes its sale as “the best car in the world for its money.”
The only unfavorable light Munster sheds on the event is the cost of the giant’s Enhanced Autopilot, branded with a price tag of a hefty $5,000. “This begs the question: Will the company charge to unlock full autonomy?” asks Munster, who wonders if more costs will sprout up by 2020.
Ultimately, “Consumers are going to love the design and the interior of the Model 3: a minimalist interior, single panel landscape display, glass roof, no grill with all smooth surfaces. […] car buyers in the $30-50k range will be more than pleased with the Model 3 ride,” concludes Munster, rooting for the future success of the Model 3.
TipRanks analytics show TSLA as a Hold. Out of 17 analysts polled by TipRanks in the last 3 months, 5 are bullish on Tesla stock, 8 remain sidelined, and 4 are bearish on the stock. With a loss potential of 8%, the stock’s consensus target price stands at $296.50.
Is the Whispered iPhone X Delay a Soft Stumble or a Chasm?
Apple Inc. (NASDAQ:AAPL) is gearing up to post its fiscal third-quarter print this evening, but analysts across the Street are more fixated on what could be the first ever delay of an iPhone launch in a decade. Does this spell bad news for the tech titan, or is Apple’s colossal force of triumphant success unstoppable, even with a rumored delay afoot?
As far as top analyst Amit Daryanani at RBC Capital is concerned, a veering off the track of punctuality is simply a push- not an eraser of the upside waiting in the wings upon the release of this buzzed-about 10th anniversary addition iPhone model.
Therefore, the analyst maintains an Outperform rating on AAPL with a price target of $168, which represents a close to 13% increase from where the shares last closed.
Daryanani asserts with confidence, “While we note that this timing shift likely creates risk to Sep-qtr/FY17 estimates (consensus forecasts $49.2B/$1.81 and 41M shipments vs. our estimates of $45.2/$1.72 and ~40M iPhone units),” adding, “a timing shift doesn’t alter AAPL’s $12+ upside EPS scenario for FY18.”
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Amit Daryanani has achieved a high ranking of #14 out of 4,627 analysts. Daryanani has an 84% success rate and realizes 25.8% in average profits on the stock. When recommending AAPL, Daryanani gains 31.8% in average profits on the stock.
Wells Fargo analyst Maynard Um sees more trouble lurking than simply a revenue slide to the first fiscal quarter of 2018, and does not share Daryanani’s bullish sentiment on the titan. Um argues that it is a not just a pebble-sized problem for Apple that they might need to postpone the epic iPhone launch, which might reveal deeper issues at hand of creative struggles. Is this a sign that Apple’s ability to be a tour de force in the tech world might be suddenly lapsing?
Apprehensive on gross margin pressures ahead and formidable comps should the delay rumor mill prove true, the analyst reiterates a Market Perform rating on the stock with a price target of $140, implying a roughly 6% downside from where the shares last closed. (To watch Um’s track record, click here.)
Um emphasizes, “It’s noteworthy that this would be Apple’s first iPhone delay, which would be highly atypical and possibly reflecting increasing difficulty in delivering innovation and/or slipping execution.”
“While unit expectations have been tempered for Sept, we believe gross margins may also be challenged as new product ramp up costs are unlikely to be pushed out with revenue and continued component pricing pressures. Apple’s gross margins declined by 140bps when the company introduced its iPhone 6 (meaningful form factor changes). By comparison, the Street is currently modeling a 10bps seq. expansion, which we believe could prove to be aggressive (particularly given our view that underlying gross margin in the last quarter was lower than reported gross margin […]” elaborates the analyst, who fears that “continued production delays could make the Dec quarter challenging (noting last year’s Dec quarter had an extra week to help units so isn’t a good unit comparison).”
Ultimately, the delay not only may make investors antsy, it likewise “[…] creates a much more challenging F19 comp” for the titan, keeping Um skeptically on the sidelines.
TipRanks analytics demonstrate AAPL as a Strong Buy. Based on 34 analysts polled by TipRanks in the last 3 months, 26 rate a Buy on Apple stock while 8 maintain a Hold. The 12-month average price target stands at $165.85, marking a nearly 12% upside from where the stock is currently trading.
Shopify Could Skyrocket 50% to 60%- ‘If Everything Clicks’
Shopify Inc (US) (NYSE:SHOP) shares are rising almost 3% today in pre-market trading in anticipation for the Canadian e-commerce platform, and top analyst Richard Davis at Canaccord would not be surprised to spotlight new upswings ahead
In a positive earnings preview, the analyst makes a bullish cake for the platform ahead of the print, reiterating a Buy rating on shares of SHOP with a $90 price target.
Davis believes, “Among the quiet time reporters, SHOP could get a bit of a bounce. Shopify shares are quite expensive, but for some reason the shorts seem to cover or algorithms kick in buy orders when these guys report what have been quite good results. We expect another positive print and guide from SHOP, so the stock should at least work tactically.”
It is not beginning to look a lot like Christmas just yet, in the tail-end of July, but yet Davis looks forward as the season approaches the holiday season, betting investors will back Shopify increasingly more. How much more? To the tune of the stock amplifying by an extra 50% to 60%, in fact.
“If the more likely number, or the number that Shopify will guide to on its January earnings call is closer to a still epic 45-50% range, then management should be feeling some angst if the buy-side gets too far over their skis, and the sell-side lets them by at least entertaining the notion of a 50-60% growth year,” ventures the analyst, who likewise contends management could stand to subdue expectations a tad.
Everything will hinge on 2018’s success, because “if everything clicks” for the platform, the company’s shares will surely fly. “Therefore, while this stock has tended to pop a lot more than we expected off of its prints, you should not buy SHOP for a week-long trade, but instead to consider holding for at least another quarter in order to get a look at 2018,” surmises Davis.
Richard Davis has a very good TipRanks score with a 77% success rate and a high ranking of #5 out of 4,627 analysts. Davis yields 25.3% in his annual returns. When recommending SHOP, Davis garners 126.9% in average profits on the stock.
TipRanks analytics exhibit SHOP as a Buy. Out of 16 analysts polled by TipRanks in the last 3 months, 8 are bullish on Shopify stock while 8 remain sidelined. With a loss potential of just under 1%, the stock’s consensus target price stands at $91.73.