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Tesla (TSLA): Goldman Sachs Just Got More Bearish on Model 3 Production Track

Goldman Sachs' analyst David Tamberrino now looks for a sharp 36% downside for Tesla shares.


Ever since Tesla Inc (NASDAQ:TSLA) unleashed its first quarter production and delivery numbers for 2018 one week ago, the stock has been battling its way back up in trading. First, the TSLA team reassured investors of no need to spring for an equity or debt lift in 2018 beyond standard credit lines. More importantly, the electric car giant’s team maintained its goal to hit a 5,000 per week rate in Model 3 production by the close of the second quarter.

Goldman Sachs analyst David Tamberrino is angling for more of the same: a “shallower” Model 3 ramp, and sustainable weekly production that has better odds to underclass the headline run-rate than achieve it.

Therefore, the analyst reiterates a Sell rating on TSLA stock while cutting his 6-month price target from $205 to $195, which implies a 36% downside from current levels. (To watch Tamberrino’s track record, click here)

Overall, “with only a sustainable production rate of approx. 700 vehicles throughout the quarter —after achieving an extrapolated +1,000 Model 3’s per week ending 4Q17, we believe the sustainable production rate for 2Q18 is most likely below the 2,000 vehicle mark the company achieved in the final week of the quarter. In our view, we see the company likely sustaining Model 3 production around the 1,400/week mark following its most recent Fremont line improvements (which took place in February 2018); while this is an improvement from our previous […], it is below revised consensus forecasts as well as below bullish investors’ expectations, in our view. Further, we believe that Model S/X demand will likely be challenged going forward with the phase-out of the US EV tax credit in 2H18 and as incremental competition launches at the same time —and we adjust our forecasts accordingly. Lastly, we still expect the company to raise capital later this year given Model 3 cash burn and targeted growth projects,” Tamberrino concludes.

TipRanks indicates sell-side analysts are largely cautious when surveying the electric auto empire. Out of 20 analysts polled in the last 3 months, 5 are bullish on TSLA stock, 9 remain sidelined, while 6 are bearish on the stock. With a slight return potential of nearly 2%, the stock’s consensus target price stands at $309.29.