Tesla Deliveries Miss Spooks Analysts, Investors and Debt Holders

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Tesla Inc. (NASDAQ: TSLA) is having a rough morning. While Elon Musk awaits to find out if he is in contempt of an SEC order, the current pressure is coming on the heels of much weaker delivery numbers on the electric vehicles in the first quarter.

There continue to be concerns about how strong the demand is for the company’s Model 3 sedan that has been on the market for less than two years. Tesla delivered just 63,000 vehicles in the first quarter of 2019, far short of estimates, and it was much lower than the 90,966 deliveries reported in the fourth quarter.

While Tesla has reiterated its forecast of 360,000 to 400,000 vehicle deliveries for 2019, analysts have kept their ratings steady while lowering price targets on Musk and company.

CFRA (S&P Global) maintained its Sell rating on Tesla while also lowering its target price to $225 from $250. Analyst Garrett Nelson lowered his EPS targets to $3.50 from $4.15 for 2019 and to $7.25 from $7.80 for 2020. With weaker deliveries reported in the first quarter and with the federal electric vehicle tax credit stepping down and being a disincentive for potential buyers, Nelson believes that Tesla will be hard pressed to hit the annual 2019 guidance.

Canaccord Genuity maintained the stock with a Buy rating but lowered its target price to $391 from $450. Even back on March 15, Canaccord’s Jed Dorsheimer noted that the coming Model Y event was likely to fall shy of whisper expectations and that it would take quite some time to be a meaningful contributor to Tesla’s numbers near term.

JMP Securities maintained its Outperform rating on Tesla, but its target price was lowered to $374 from $394.

Wedbush Securities maintained its Outperform rating while cutting its target price to $365 from $390 target.

Merrill Lynch maintained its Underperform rating and $225 price objective, with the firm’s John Murphy noting that production has been slow to materialize and that other challenges have emerged. He still believes that Tesla’s liquidity will be pressured and may require the future capital raises that Musk has said were not necessary in past months.

Robert W. Baird’s Ben Kallo maintained his Outperform rating and $465 target price on Tesla, but he did lower full-year revenues and adjusted earnings per share targets to a below-consensus figure based on the deliveries shortfall.

One further slam on Tesla on Thursday has been seen in junk bonds that the company has outstanding. Reuters reported that Tesla’s 5.3% senior unsecured notes due in 2025 saw their prices drop 2.26 cents to 85.10 cents on the dollar on the heels of the deliveries miss. That sent the yield up almost a half-point to 8.37%. Reuters further showed that the credit default swap was now about 22 cents on the dollar.

Just on March 29, JPMorgan’s Ryan Brinkman reiterated his Underperform rating on Tesla and lowered his target to $215 from $230 based on more headwinds from Europe.

Tesla shares were last seen trading down 8.5% at $267.10, in a 52-week range of $247.77 to $387.46.

All this is happening on the same day that one of the “Tesla(s) of China” saw two analyst upgrades.


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