Tigress analyst Ivan Feinseth looks at a struggling electric car giant when he sees Tesla Inc (NASDAQ:TSLA), out with a note of caution on the company’s ghosts of execution challenges that continue to haunt right along with Model 3 production ramp-up pushbacks. Consider that this is a company who failed to meet its 1,500-vehicle production target, tripping up on supply chain bottlenecks.
As such, the analyst reiterates a Neutral rating on TSLA stock without listing a price target. (To watch Feinseth’s track record, click here)
“Business Performance and profitability continues to be constrained due to ongoing R&D expenses and production ramp-up costs,” warns the analyst, who likewise finds the company’s short-term opportunity hinges upon CEO Elon Musk’s ability to keep boosting funds: “TSLA’s near-term success remains dependent on its favorable access to capital.”
Overall, “Investor expectations have been based on TSLA’s Model 3 to help it evolve from a niche car producer to a competitive automobile manufacturer. High R&D costs together with significant capital expenditures needed to ramp up production continue to push TSLA’s potential profitability a long way off. TSLA’s strong brand equity and quality product offering are outweighed by its execution risk and production delays. TSLA’s ongoing need for additional capital continues to create a significant level of uncertainty around its current valuation. Long-term, TSLA has the potential to become a leading ZEV (Zero Emission Vehicle) manufacturer and clean energy generation provider. Near-term uncertainty, production difficulties, and capital needs keep us neutral on the stock,” Feinseth concludes, noting that the company’s new semi-truck hangs in the balance as the future driver of Tesla’s gains.
TipRanks points to a Wall Street majority that backs Feinseth’s sidelined perspective on the electric car empire, leaning towards the bearish camp. Out of 23 analysts polled in the last 3 months, 5 are bullish on Tesla stock, 9 remain sidelined, and 9 are bearish on the stock. With a loss potential of 2%, the stock’s consensus target price stands at $318.38.
