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Long-Term Macro Trends Supporting $310 Price Target For Tesla Motors
- Initiating coverage on Tesla Motors at a price target of $310, rounded down from discounted terminal value analysis yielding $318 value.
- Pure electric vehicles provide the best value proposition to consumers and the Model S compares favorably to other high end vehicles. Concerns over demand are unwarranted.
- Stock valuations are likely to expand going forward; technology stocks are leading the way in P/E expansion. Tesla's astronomical valuation is likely to persist until the market pops.
- While some short arguments are valid, TSLA is likely to continue moving higher over the next several years.
- Long term prospects for the business are sound. Short sellers face the risk of TSLA organically growing into its lofty valuation.
Audi Confirms 300-Mile Range EV, Plans To Compete With Tesla
- Audi confirms two new pure electric cars will enter production.
- First up is the R8 eTron super-sportscar, to be unveiled in January 2015.
- Far more important is the 300-mile range EV family car, set to start production in calendar year 2017.
- Audi looks serious about competing with Tesla.
- Volkswagen makes ten million cars per year, and has huge procurement scale and manufacturing efficiency advantages.
Tesla Reported Deliveries Don't Seem To Jibe With External Data
- Tesla reported year-to-date deliveries of 21,821 vehicles.
- U.S. registrations total only 9,331.
- Export figures through August 31, 2014 suggest no more than 4,556 vehicles were shipped abroad.
- WSJ estimates put September deliveries at 3,274.
- Total registrations, apparent exports and the WSJ September estimate equals 17,161 vehicles - far short of the 21,821 reported by Tesla.
- Tesla Motors delivered well during the quarter, doubling its revenues and gross profits. Revenues swelled due to automotive sales and margins expanded as well.
- Production for the quarter was lower than expected at 7,200 vehicles. Tesla has lowered its production guidance to 33,000 vehicles for 2014.
- The rollout of the Model X has been delayed. Originally scheduled for launch by the end of this year, the release has been pushed forward to Q3 of 2015.
- Tesla remains focused on its main production target of 500,000 cars by 2020, a prospect that has helped keep investor confidence and share prices aloft.
- Share prices are likely to remain bullish in the long term, Tesla still remains under pressure to improve on its production performance and meet launch dates in the future.
Tesla's Best Prospects Might Be Outside North America
- Elon Musk predicts overseas sales will make up 50% of Tesla's total for 2015.
- Europe is a bottom-up growth market because of the public's environmental awareness, but American cars have a poor reputation.
- Asia is a top-down growth market, but some resistance to electric cars exists in this brand-conscious region.
- Tesla market value today is about $1 million per vehicle to be sold in 2014, which is equivalent to 49-99x that of leading car producers.
- With a flawed strategy, Tesla is directly aiming at disrupting the trillion dollar auto industry and consequently the bigger energy industry.
- Given the major strategic challenges that Tesla is facing, full-time dedicated leadership of Musk is a very basic prerequisite.
Elon Musk Appears To Have Misled Investors On Tesla's Most Recent Conference Call
- On the Q3 conference call, Tesla CEO Elon Musk blamed the company's guidance reduction on "production problems".
- Musk stated that "...demand is not our issue. Production is our issue".
- Musk also made a VERY specific statement regarding inventory. That statement is highlighted and contradicted below.
- Tesla Model X release will be delayed till third quarter of 2015.
- Musk mentions two of the problems causing the delay, the “Falcon Wing doors", and “the Secondary Seats".
- Examining these problems shows why the delay will be so long.
- Musk will now personally make sure all these problems are not only solved but Tesla will end up with a much more sell-able car.
- The assumptions embedded in Tesla's stock price reflect best-case scenarios.
- Many Tesla investors are under the influence of the halo effect.
- There will come a time when Tesla encounters unexpected hiccups, and when it does, many of these investors will turn on the company: that will be the time to invest.
Tesla Model S Sales May Be Slowing In The U.S., But Does It Matter?
- Various estimates indicate Model S sales may be down YTD vs. 2013 in the United States.
- This may appear to be a bad sign, but it is a natural result of the huge pent-up early demand from buyers who modified their purchase cycles to buy Teslas.
- Tesla has very high customer satisfaction rates, but it is too soon for repeat customers to make up a significant proportion of sales.
- As well, Tesla is working on building market share among those buyers who are evaluating cars as part of a normal purchase cycle.
- Key stats going forward are the retention rate, and switching rate from other luxury/high-performance car brands.
Inefficiencies In Transition To New Assembly Line Force Tesla To Revise Outlook
- Tesla earnings impacted by shift to new production facility.
- Introduction of the Model X by mid-2015 should help Tesla meet production rate targets.
- Tesla continues to develop lease program to attract buyers.
Update: Tesla Earnings Highlight Spending Ramp-Up And A Time To Sell
- Tesla posted revenue growth, beating both revenue and earnings estimate. The company announced its plan to ramp up production. Expenses are expected to increase.
- Tesla remains a sell amid disproportionate high valuation that can’t be justified on any level.
- I was wrong about the results below guidance as catalyst for downward trend. Nonetheless, the stock is down 9.5% since the initiation.
Update: Tesla Earnings - The Positives Outweigh The Negatives
- Tesla cuts its Q4 deliveries target and slightly delays the Model X introduction.
- But reassures on its revenue growth and profitability outlook, while dismissing concerns about a near-term capital raising.
- The positives outweigh the negatives and we reiterate our $305 base case valuation.
- The last time we wrote about Tesla Motors Inc., the non-institutional true believers flamed us for having the gall to question valuation.
- “Valuation doesn’t apply to growth stocks” was the refrain, as though trying to educate a slow child. Sorry, I don’t agree.
- All stocks have a fair value. That’s a law of investing – however uncomfortable it is for growth at any price investors.
Mon, Sep. 15, 7:35 PM
- Tesla (NASDAQ:TSLA) is initiated at ISI Group with a Buy rating and $320 price target, as the firm believes battery electric vehicles are the way forward, not hydrogen fuel cell electric vehicles.
- ISI says TSLA is not exposed to global emissions standards, which the firm sees as the single largest threat to automotive returns; while conventional OEMs face headwinds of ~$1,350/unit, TSLA's costs will come down with technology advances and scale, the analysts say.
- TSLA’s volumes are frequently compared to other electric vehicle sales, but the global market opportunity for TSLA is far greater, ISI says, suggesting 500K units by 2020 is achievable.
- Of all TSLA milestones so far, few are as important as the company’s progress in China, the firm says, adding "it is difficult to foresee an OEM better placed than Tesla to assist the government in meeting its goals."
Mon, Sep. 15, 3:25 PM
- The highest court in Massachusetts rules that Tesla Motors (TSLA -9%) can sell directly to the public in the state.
- The Massachusetts Supreme Judicial Court upheld a ruling from a lower court.
- Shares of Tesla Motors are lower today after Morgan Stanley took a more cautious stance on the EV automaker and with a broader downturn in momentum stocks in play.
Mon, Sep. 15, 8:12 AM
- Morgan Stanley analyst Adam Jonas keeps his Overweight rating on Tesla Motors (NASDAQ:TSLA) in place, but backs off the time frame for the stock hitting his $320 price target.
- Jonas, who's been a bit of a Tesla acolyte, says shares of the EV automaker are running ahead of themselves for the wrong reasons.
- It's a take that's not too far off of what CEO Elon Musk said earlier this month about Tesla's share price.
- TSLA -2.4% premarket to $272.50.
Fri, Sep. 12, 2:38 AM
- Tesla's (NASDAQ:TSLA) $1.3B in tax breaks and other incentives has been approved by Nevada lawmakers, cementing a deal for the electric car company to construct a $5B battery plant in the state.
- The new bills grant sales tax exemptions for 20 years, an incentive estimated at $725M, and will allow Tesla to save more than an estimated $300M in payroll and other taxes through 2024.
Thu, Sep. 11, 3:40 PM
- Toyota (TM -0.2%) says it has no new or pending battery projects under discussion with Tesla Motors (TSLA -0.3%).
- The announcement is the Japanese automaker's first official response to a statement from Elon Musk earlier this week that a fresh Tesla-Toyota partnership could happen within a few years.
- The development could ratchet up the dialogue in the electric car vs. hydrogen fuel cell debate as both automakers have aggressive plans for 2015 for their preferred technology and have been known to take swipes at each other.
Wed, Sep. 10, 12:58 PM| 59 Comments
Wed, Sep. 10, 3:32 AM
- Nevada lawmakers are heading to Carson City today to convene a special legislative session to discuss an up to $1.3B tax break package aimed at cementing Tesla's (NASDAQ:TSLA) $5B battery plant deal.
- Tesla CEO Elon Musk previously said that Nevada's offer to Tesla "was not the biggest incentive package" but the state was picked because it "can do things quickly" and "get things done".
Mon, Sep. 8, 3:07 PM
- Tesla Motors (TSLA +1.7%) CEO Elon Musk tells The Nikkei that he sees a partially self-driving car out from the EV automaker in roughly three years.
- The driving system will be developed in-house using sensors and components from suppliers.
- Musk think that in the long-term all Tesla cars will have an auto-pilot function.
Mon, Sep. 8, 8:33 AM
- Morgan Stanley takes a cautious view on the U.S. automobile industry in a sector-wide downgrade.
- Easy financing and leasing terms is pulling forward demand from the future, according to a forecast from MS.
- The investment firm's price target on General Motors (NYSE:GM) was reduced to $29 from $33.
- Related stocks: TM, OTCPK:FIATY, HMC, OTCPK:NSANY, TSLA, OTCQX:VLKAY, OTCPK:DDAIF, OTC:HYMLF, OTCPK:BAMXY.
- Previous: Ford cut to Underweight by MS.
Mon, Sep. 8, 7:09 AM
- Tesla Motors (NASDAQ:TSLA) CEO Elon Musk says he wouldn't be surprised if the EV automaker strikes a major deal with Toyota (NYSE:TM) in the next two to three years.
- Though Tesla has supplied batteries for some RAV4 EVs over the last few years, there has also been a bit of friction between the two companies in a war of words over the use of hydrogen fuel cell technology.
- Musk's comments were made in Japan where Model S deliveries are starting.
- TSLA +0.7% premarket
Fri, Sep. 5, 8:03 AM
- Tesla (NASDAQ:TSLA) is on watch after CEO Elon Musk told CNBC last night, "I think our stock price is kind of high right now, to be totally honest."
- Investors "sometimes get carried away" with the stock price, Musk said. "If you care about the long term, I think the stock is a good price. If you look at the short term, it is less clear."
- The CEO made similar remarks last November when the market cap was ~$15B; the valuation now is ~$36B.
- Shares -0.8% premarket.
Thu, Sep. 4, 8:59 PM
- The state of Nevada offered Tesla Motors (NASDAQ:TSLA) $1B worth of benefits in the form of tax breaks and abatements spread out over 20 years in order to win the gigafactory, according to Governor Brian Sandoval.
- Tesla CEO Elon Musk kept his statement simple, saying the gigafactory will allow for the mass production of EVs for decades to come.
- What to watch: The gigafactory promise from Tesla is for 50GWh in annual production by 2020. That works out to a run rate of 500K Tesla cars.
Wed, Sep. 3, 3:48 PM
- Execs with Tesla Motors (TSLA -1.1%) will join Nevada Governor Brian Sandoval at a press conference tomorrow in Carson City, Nevada during which it's expected that an announcement will be made that Tesla's gigafactory will be located in Nevada.
- No official statement from the EV automaker has been issued.
Tue, Sep. 2, 8:26 AM
- Stifel Nicolaus upgrades Tesla Motors (NASDAQ:TSLA) to a Buy rating and gives the EV automaker a $400 price target.
- The investment firm walked away impressed from a factory tour and sees a run rate of 1,000 units per week by the end of the year as achievable.
- The estimate for Tesla's 2017 EPS is lifted to $8.28 vs. $6.14 prior.
- Stifel on momentum: "TSLA sentiment is like a freight train, in our view, benefiting from a well manicured growth story that has caught the eye of a much broader investor base relative to most auto stocks."
- TSLA +2.8% premarket to $277.26.
Fri, Aug. 29, 11:08 AM
- Comments out of China from BYD Company's Wang Chuanfu are creating a stir in the electric vehicle industry.
- Chuanfu maintains that a new consumer tax on gas is being considered by Beijing.
- He notes that even a 0.2 yuan per liter tax adds up to "hundreds of billions" which could be funneled by the government to support EV infrastructure and development programs.
- Tesla Motors (TSLA +2.3%) printed an all-time high of $270.60 earlier with the China news helping to boost sentiment a bit.
Fri, Aug. 29, 10:27 AM
- Global auto sales rose 1.5% in July to 6.87M units.
- A strong month in China and India helped offset weakness in Japan, Brazil, and Russia.
- YTD sales are up 2.6% Y/Y to 50.2M units through July, paced by strong demand in North America and Asia.
- What to watch: South America continues to see its market share for global auto sales slide. The region could see automakers pull back further on capacity and investments due to the slump.
- Automakers: GM, F, TM, OTCPK:FIATY, HMC, OTCPK:NSANY, TSLA, OTCQX:VLKAY, OTCPK:DDAIF, OTC:HYMLF, OTCPK:BAMXY, OTC:KIMTF, OTCPK:MMTOF, OTCPK:PEUGF, OTC:RNSDF, TTM
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