Tesla was set to open more than 6 percent below the previous close on Thursday after it spooked investors with its biggest quarterly loss yet and a delay in production targets for its Model 3 vehicle by about three months. After a year which has seen shares in Silicon Valley star Elon Musk's venture rise 50 percent on faith in its positioning as a major future carmaker and manufacturer, analysts expressed doubt over Musk's communication with markets and one - Nomura's Romit Shah - said the company could need more financing.
"Tesla needs to slow down and more narrowly focus its vision and come up for a breath of fresh air," Cowen and Co analysts said in a note. "Elon Musk needs to stop overpromising and under delivering," Tesla said bottlenecks in the ramp-up of production of the more affordable Model 3 sedan, widely seen as crucial to the company's future profitability, stemmed from its battery module assembly line at its Nevada Gigafactory, where Tesla had to redesign part of the production process.
It now expects to build 5,000 Model 3s per week by the end of the first quarter of 2018 from its original target date of December. Some analysts were encouraged by the detail Tesla provided about the battery and production issues and expressed confidence in its ability to fix the problems. But they were more divided on the company's promise that it was now on top of the Model 3 issues and well-capitalised for the extra investment needed to resolve them.
"While we expect that increased Model 3 production will provide a meaningful injection of liquidity on a number of fronts, Tesla runs the risk of requiring financing over the next few quarters, particularly if Model 3 production continues to undershoot expectations," Nomura Instinet analyst Romit Shah said in a note on the results. He added that the market would continue to support Tesla’s capital requirements.
Wall Street is now cautious on the stock in general, with 8 of 24 brokerages rating it "Buy" or higher, 9 "Hold" and 7 "Sell" or lower.
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