Tesla Inc (Nasdaq: TSLA) investors get an important update on the Model 3 this week, and analysts are expecting the electric car company to once again miss the mark. Loup Ventures analyst Gene Munster says Tesla investors should be prepared for more bad Model 3 news throughout 2018, but they shouldn’t give up on Tesla just yet.
Munster is expecting Tesla to report fourth-quarter Model 3 deliveries of just 2,500, less than half of the consensus Wall Street analyst estimate of 5,200. To make matters worse, Munster says Tesla will likely miss its first 2018 Model 3 production target as well. After previously targeting Model 3 production of 5,000 vehicles per week by the end of 2017, Tesla bumped that target back to “late Q1 2018″ following its third-quarter earnings report. Munster says even the new target is “ambitious.”
But even if Tesla stock takes a hit on more Model 3 production delays, Munster says investors can rest assured Tesla’s technology remains ahead of schedule.
“While other car manufacturers build gas-powered vehicles at scale, building autonomous EVs is a vastly different process that will require traditional auto manufactures to re-engineer their production facilities,” Munster says. He says Tesla is simply experiencing the same type of production difficulties that every other automaker will experience when transitioning to large-scale electric and autonomous vehicle production.
In October, Tesla reported that it produced 220 Model 3 vehicles in the third quarter. CEO Elon Musk had previously said the company would produce more than 1,600 Model 3s by September.
Munster isn’t the only analyst to doubt Tesla’s fourth-quarter Model 3 production. KeyBanc analyst Brad Erickson reduced his fourth-quarter Model 3 production target by two-thirds, cutting it from 15,000 to only 5,000.
Like Munster, Erickson says investors shouldn’t get too hung up on a single number.
“We think bullish investors in particular remain more focused on that the car is being produced with minimal defects and that consumer reviews and response are favorable,” Erickson says.
According to Munster, Tesla investors may need to wait several more quarters for the Model 3 story to play out. “We predict…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
