Can Tesla (TSLA) Survive its Latest ‘Rollercoaster?’

GBH Insights' Daniel Ives calls Tesla's current picture a "perplexing" one, but should Model 3 production improve, shares have a chance to soar higher.


It seems a corporate restructuring is brewing over at Tesla Inc (NASDAQ:TSLA), and investors are taking to the news by sending the stock on an almost 6% dip in the last 2 days. Meanwhile, questions linger around the production-challenged Model 3, which even CEO Elon Musk acknowledges has been a hellish road paved with challenges. Investors have had a lot of patience for the legendary brand, but bull GBH Insights analyst Daniel Ives sees the upcoming few months as “pivotal” for this electric car giant.

True, the last weeks for this company as well as TSLA investors have been quite the wild ride, with the analyst underscoring a volatile period that began “with one of the most perplexing earnings calls we have heard in the last few decades, followed by its senior engineering head Doug Field taking a ‘break’ from the company, and now the news that a flatter management structure at the company is on the horizon along with a hackathon announced yesterday to fix the two worst production choke points for the Model 3.”

Ives continues, “While its been a rollercoaster few weeks for investors with much agita, importantly it appears production on Model 3 is clearly moving in the right direction as this remains a linchpin for the company‚Äôs long term success and thus limit its cash burn situation which remains a clear overhang on the stock. Taking a step back, the focus for Tesla, Musk, and investors is laser centered around ramping up Model 3 production efforts to narrow the gap on the production line reaching the elusive 5,000 per week mark, which has been its Achilles heel.”

As the analyst keeps his eyes peeled to the “bottleneck situation,” any smoothed-out production challenges would translate to a significant positive driver for TSLA shares. Even if the company is not quite at its ambitious Model 3 weekly goals angling for 5,000 a week, Ives is reassured to see some “progress” amid a tricky last year. The production right now is approaching 3,00 to 3,200 each week and has a fighting chance to achieve the ultimate target goal of 5,000 per week as the months pass. Ives has his bet on July; which could prove advantageous to not only Tesla, but its cash burn.

Confident through “more uncertainty and worries to the Model 3 production saga,” with the loss of a key engineering force within Tesla at a critical time “a bit ‘head scratching,” the analyst stands by the bulls, reiterating an Attractive rating on TSLA stock with a $320 price target. This implies a 12% upside from current levels. (To watch Ives’ track record, click here)

TipRanks reveals caution hangs heavy above the auto empire’s stock, with a divided Street leaning toward the bears. Out of 20 analysts polled in the last 3 months, 4 are bullish on TSLA stock, 9 remain sidelined, while 7 are bearish on the stock. With a loss potential of 1%, the stock’s consensus target price stands at $288.07, essentially just below where the stock is currently trading.

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