Here’s Why Valuation Around Tesla Motors Inc (TSLA) May Remain Depressed: Analysts

Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk has unveiled the new and updated version of the Secret Tesla Motors Master Plan in a post on the company’s website. The plan outlines four key tenets: 1) the rationale for bringing solar power and battery storage under one roof, 2) expanding TSLA’s EV line-up to include heavy duty trucks and buses, 3) driving advancements in autonomous vehicles, and 4) creating a vehicle-sharing platform enhanced by autonomous driving.

Oppenheimer analyst Colin Rusch cautiously noted, “While we are believers in the growing value and importance of sustainability and broad societal efficiency, we are cautious that the financial needs of TSLA’s growing scope will limit stock performance. We continue to see a divided investor base, with one camp bought in on the company’s vision and another focused on cash needs to fulfill that vision. We suspect that performance on cash metrics over the next 12 months will be increasingly important and drive stock performance. We remain on the sidelines.”

Sell side analyst Colin Langan from UBS added some more concerns, noting that, “Given investor caution around the SCTY deal, we are surprised by the lack of new details on the solar/storage combo. It is unclear why a JV wouldn’t enable the same opportunity. We see the merger as an unneeded distraction adding complexity to TSLA, which already has too much on its plate with near term production issues, the coming Model 3 launch, and aggressive production targets (see Driving off into the Sunset). Also, in our prior note Merger Puts Battery Storage Front and Center, we highlighted our view that storage is not economic for most residential customers due to net metering.”

Out of the 20 analysts polled by TipRanks, 8 rate Tesla stock a Buy, 8 rate the stock a Hold and 4 recommend a Sell. With a return potential of 20%, the stock’s consensus target price stands at $266.94.


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