Tesla Delivered Record 139,300 Vehicles in Q3; Shares Could Plunge Over 30% to $302

Tesla Inc, an American electric vehicle and clean energy company based in California, said on Friday that it produced just over 145,000 vehicles and delivered a record 139,300 vehicles in the third quarter, shrugging off the good news shares fell over 5% in pre-market trading.

The manufacturer of high-performance electric vehicles slightly beats the market consensus of 134,720 vehicles deliveries.

Tesla delivered 124,100 units of its new Model Y sport utility vehicle and Model 3 vehicles in the period as U.S. production recovered after being suspended from the end of March to early May due to the COVID-19 lockdown. That was below expectations of 128,000 Model 3 and Model Y vehicles combined, Reuters reported.

Tesla’s shares closed flat at $448.16 on Thursday; the stock is also up over 400% so far this year. However, it plunged 5.61% to $423.03 in pre-market trading on Friday.

Tesla stock forecast

Thirty analysts forecast the average price in 12 months at $302.56 with a high forecast of $566.00 and a low forecast of $19.00. The average price target represents a -32.49% decrease from the last price of $448.16. From those 30, six analysts rated ‘Buy’, 14 analysts rated ‘Hold’ and ten rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $272 with a high of $527 under a bull scenario and $102 under the worst-case scenario. Tesla has been assigned a $400 price objective by stock analysts at Credit Suisse Group. The brokerage currently has a “neutral” rating on the electric vehicle producer’s stock.

Several other equity analysts have also updated their stock outlook. DZ Bank reissued a “sell” rating on shares of Tesla. Jefferies Financial Group reissued a “buy” rating. At last, Cfra raised shares of Tesla from a “sell” rating to a “buy” rating.

Analyst comment

“We are positive on Tesla’s leadership across: EVs, Batteries & FSD and see an opportunity for TSLA to further penetrate these key TAMs. Why not OW? At its current valuation, we believe the market has already discounted a large part of Tesla’s growth potential. Further, competition in the EV market continues to intensify from traditional OEMs, startups & mega-tech firms,” said Adam Jonas, equity analyst at Morgan Stanley.

“We also continue to harbour concerns over the long-term efficacy of an auto business commercializing advanced tech that is economically sensitive within China. As Tesla expands production, they will likely need to raise more capital. While there is a strong appetite in the short-term, it will dilute shareholders in the long run,” he added.

Upside and Downside Risks

Upside: 1) Tesla China profitability surprises to the upside. 2) Europe Giga success. 3) Model Y margin accretion. 4) Software margin accretion. 5) Tesla the Supplier? 6) Cybertruck, highlighted by Morgan Stanley.

Downside: 1) May never make the leap to a shared mobility model, limiting itself to niche OEM status. 2) Execution risk / COVID-19. 3) Openness of capital markets to funding Tesla’s strategic ambitions. 4) Large & better-capitalized technology firms emerging as competitors.