Tesla Gets a Downgrade on Model 3 Issues

Firm UBS has reiterated its “sell” rating on electric vehicle giant Tesla, citing that the company will have continued problems with its Model 3 vehicles.

Analyst Colin Langan wrote in a note to clients on Monday, “We believe the market should not ignore fundamental challenges that persist with regards to Tesla’s Model 3 profitability, stationary storage & solar businesses, and eventual need to raise cash.”

“Not only does the [Model 3] miss undermine the credibility of future Model 3 targets, but it increases the near term risks,” he wrote.

“We believe the market should not ignore fundamental challenges that persist with regards to Tesla’s Model 3 profitability, stationary storage & solar businesses, and eventual need to raise cash.”

UBS has a 12-month price target of $185 on the stock still. He lowered his financial results estimates for the
company due to the “slower Model 3 ramp.” He now forecasts a loss of $6.40 per share from a loss of $5.30 for 2017 and to a loss of $3.30 from a loss of $1.60 for 2018.

“With limited Model 3 profitability, infrastructure expansion needs, & Model Y capacity build (late 2019), we believe TSLA will eventually need additional outside funding,” he wrote. “We see increased pressure on demand as luxury automakers launch competing products in the 2018-20.”

Tesla shares felt the burn of the note on Monday but are up about 50% for the year.

Disclaimer: We have no position in Tesla Inc. (NASDAQ: TSLA) and have not been compensated for this article.

Sofia Vida

Sofia has been writing for major news outlets for over 15 years. In her spare time she enjoys hiking, walking her dogs, and going to concerts.

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