Benjamin Rosen

About the Author Benjamin Rosen

Originally from Pittsburgh, Ben Rosen is a student at the University of Michigan -- Ross School of Business pursuing his degree in Finance and Management. Ben came to intern for Smarter Analyst after his freshman year where he developed a strong passion for financial markets and confirmed his interest in pursuing a finance-related career. Ben is involved in a number of different organizations, including BBA Finance Club, Michigan Real Estate Club, Enactus, and the Michigan Investment Group, where he serves as sector head for the technology, media, telecommunications desk. In his free time, Ben enjoys playing sports, travelling with friends, and rooting for the Pittsburgh Steelers.

Tesla (TSLA): Loup Ventures Shadows Fremont Production, Maintains Confidence in the Electric Giant’s Future


Loup Ventures’ Gene Munster remains bullish on electric car giant Tesla (NASDAQ:TSLA) after getting a solid feel for current Model 3 production.

Stalking is often pretty discomforting, but is it acceptable under some circumstances? Loup Ventures team seems to think so. Last weekend, the ambitious venture capital firm sent analyst Mira Wallace to study Tesla’s ongoing Model 3 production at its main factory in Fremont, CA. Because the site is private property, Wallace had to gauge production rates from the window of her Marriott hotel room, counting the number of Model 3-carrying trailers that left the site from Thursday to Sunday.  Here’s what she found:

Image result for tesla factory Fremont

  • While the Model S and X leave the factory in open trailers or railcars, Model 3s only exit in enclosed trailers. The analyst also discovered each trailer holds six vehicles, but a portion of them could be empty or just hauling raw materials. That said, Wallace estimated 75% of closed trailers were full of Model 3s and, assuming they were all at maximum capacity, calculated that Tesla is producing about 4,300-4,900 units per week.
  • Though only by a bit, Loup Ventures analyst Gene Munster considers this level of output a win for the electric auto giant. Munster realizes that as Q2 is wrapping up, Tesla is probably falling short of CEO Elon Musk’s original end-of-June target of 5,000 units per week. However, Munster maintains that Musk, as well as TSLA shareholders, should be optimistic of current progress. Even just 4,300 Model 3s produced per week would mark a doubling in output since Q1, and it would leave the company on pace to produce 6,000 units per week by the end of Q3. The tech wizard is confident that if Tesla can reach this rate, then by December, it will finally be able to generate its long-awaited positive gross margins.
  • One weekend on site, though, by no means accurately represents levels of present output; there are many confounding variables to consider. For example, because Loup Ventures has no comparative data at hand, last weekend could have marked a very above or below average span of output. Additionally, 75% is a mere estimate of the proportion of trailers full of Model 3s, and with multiple exits from the Fremont assembly, human error in counting the trucks is also a possibility.

As Loup gathered as much data as it possibly could, the firm’s modest projection of 4,300 units produced per week still indicates Tesla is in good hands. Net net, Munster reiterates that Tesla’s current growth in Model 3 production is on pace to make the company profitable by the brink of 2019.

TipRanks, however, exhibits a predominately cautious consensus on the stock. Of the 21 analysts polled in the last 3 months, 7 rate a Buy, 8 maintain a Hold, and 6 issue a Sell on TSLA. With a 12-month average price target of $306.64, the stock currently faces nearly 11% downside potential.

 

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