Tesla Cuts Production In Half For Q3, Earnings And Valuations Downgraded
Production for the upcoming quarter on the Tesla Model S has been cut in half from initial estimates by the California auto maker according to Wunderlich Securities analyst Theodore O’Neill.
That means that only 500, not 1,000 Model S vehicles will roll out of their Fremont assembly plant over the next three months. Tesla is still holding year end projections of 5,000 cars produced, but industry wide speculation has that number also in jeopardy.
As to why the production cuts, the analyst has some thoughts:
“Tesla wants to be sure the cars are right and apparently they are not in a position to ramp to get to 1,000 units this quarter. From our own due diligence, we don’t believe there is any shortage of components, so it could be as ‘simple’ as just getting the hang of lining up all the body panels, which is part art. Could it be something more serious? If it were more serious, we believe sales would have been delayed – but who knows?”
Not terribly assuring, nor is Wunderlich (and other securities firms) quick, knee jerk downgrade of the company…all the way from a “buy” rating to a “sell”.
Before this news, analysts had expected around $125-130 million in revenue and a loss of 65-70 cents per a share for Q3. All of which has been drastically slashed today.
In the case of Wunderlich, they are now looking for $86 million in revenue and a loss of 75 cents a share. While adding their model assumed a gross margin of 15%, which is above the Street consensus at 10%, so the losses could be wider still.
Wunderlich moved their price target from $49 to $28. Tesla shares fell almost 4% today to close at $32.15