Tesla is hitting some scepticism from analysts.
This week, Morgan Stanley’s Adam Jonas expressed some “sobering factors” about the company’s future — and the stock promptly fell almost 9%.
On Friday, Goldman Sach’s Patrick Archambault expressed some more substantial reservations about CEO Elon Musk’s electric carmaker (via StreetInsider):
Into 2016, spending for the gigafactory accelerates and Model 3 spending begins. Beyond that, there will be incremental follow through capital deployment related to the Model 3 and gigafactory. TSLA management has noted that the company could self-fund these amounts but would consider external funding depending on its growth cadence and other projects it takes on. For example, at the low end of our three disruptive scenarios for TSLA, we see the need for an additional $US6bn in capital.
Jonas kept his target price for Tesla at $US320 a share, while Archambault is over $US100 lower, at $US210.
It’s important to point out here that while it’s very tempting to view Tesla as…
1. Not a car company, but a technology company
2. Not a car company or a tech company, but an investment opportunity, i.e. a stock
…the fact of the matter is that Tesla’s future is inevitably about becoming a much bigger car company.
Tech companies, as is often noted, can run lean-and-mean when it comes to their capital requirements. For startups, it’s almost a badge of honour to avoid excessive spending on anything when the company is young and living off venture rounds.
A mature automakers, on the other hand, can consumer $US2 billion a month just to keep the doors open and the cars rolling off the assembly line.
So Archambault’s wait-and-see position has some merit. And although Jonas is often counted as a true Tesla bull, even he trimmed back his enthusiasm a bit this week. It looks like Wall Street is bringing a dose of reality to its coverage of Tesla.
Of course, even Musk himself has expressed some scepticism about Tesla’s valuation, so maybe nobody should be all that surprised that analysts are simply listening to the guy.
That said, the stock is still up miles from its 2010 IPO price. It’s just down about $US30 from its highs — and down over 7% this week.
Musk can take solace in the fact that one of his other companies, a little operation called SpaceX, won a $US2.6-billion contract to ferry astronauts to the International Space Station.
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