Tesla’s (NASDAQ:TSLA) Waterfall of Misses…
Production layoffs in Q-3, reports of hand assembly and Model 3 scaling concerns justified UBS’s Bearishness on Tesla Inc (NASDAQ:TSLA).
Considering Tesla’s continuing announced production misses, compounded by a decrease in Zero-emission vehicle credits and lower Model S and X margins, UBS expects a Q-3 gross margins hit to cut sequential EPS (earnings per share) from -1.33 to -2.20.
Poor fixed cost absorption ahead of Model 3 ramping will only intensify the losses at this rentier concern.
Tesla’s CEO, Elon Musk, promised 1,500 Model 3’s in Q-3 but turned out only 220 due to production bottlenecks.
“Not only does the miss undermine the credibility of future Model 3 targets, but it increases the near term risks,” the UBS analyst wrote.
Anticipating Model 3 production misses of 11,000 in Y 2017, 65,000 in Y 2018 and 40,000 in Y 2019, UBS lowered respective EPS estimates from -5.30 to -6.40, -1.60 to -3.30 and 0.20 to -1.00
Continued delays may yield more long-term losses as the roll-out of rival EVs force market-share concession.
UBS forecasts $900-M in Q-3 cash burn, comparable to last Quarter’s $1-B and indicative of a burn rate that would sustain Tesla for about 4 Quarters.
Considering the stock’s 50% YTD run reflective of a successful Y 2017 production timeline, the firm maintains a Sell rating with a 185 price target.
All of my Key indicators for TSLA have turned Very Bearish and our target has been move South from 200 to 150.
Tesla burns cash does not product cars.
|HeffX-LTN Analysis for TSLA:||Overall||Short||Intermediate||Long|
|Bearish (-0.33)||Bearish (-0.40)||Neutral (-0.21)||Bearish (-0.39)|