- Tesla has a habit of distracting itself from its main issues at hand with flashy product announcements.
- JPMorgan says that investors aren't likely to be distracted in 2018, as they will be focused on the company's Model 3 production.
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JPMORGAN: It's time for Tesla to live up to its Model 3 promises (TSLA)
JPMorgan said Tesla's shares will more likely be affected by real numbers in the coming year rather than flashy announcements.
Last week, Tesla unveiled its new semi truck and second-generation Roadster in a flashy and entertaining launch event. It was the type of spectacle that investors have come to expect from Tesla, but one that some have grown weary of.
The event was put on as Tesla was struggling to ramp up production of its first mass-marketed car, the Model 3. Some investors accuse Tesla of distracting itself with flashy shows, like the Semi event, when it should be focusing on the troubling picture going on behind the scenes. After the event, Tesla shares popped about 4%.
The ability to actually deliver on its promises could be increasingly important to Tesla. "We believe progress or lack thereof in profitably ramping Model 3 volume (and thereby stemming cash outflow) will be the key driver of Tesla shares into 2018, rather than expectations for future products such as the semi-truck or incredibly quick next-gen Roadster, etc," Ryan Brinkman, an analyst at JPMorgan, said to a note to clients on Monday.
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Brinkman said in his note that 2018 would be a make-or-break year for Tesla. As it burns through about $1 billion a quarter, it's more important to start making a profit on the Model 3 production than it is to impress customers with new vehicles that won't see daylight for years. It's worth noting that the Semi event was delayed several times as the company said it needed time to work on Model 3 production.
Tesla executives seem confident in their ability to pull off their updated target of 1,500 Model 3s per week by the end of the company's first quarter, Brinkman said. But Brinkman isn't so sure, and maintained JPMorgan's rating of Tesla as a sell with a price target of $185, about 39.68% lower than the company's current stock price.
And Brinkman isn't the only one that's bearish on Tesla. Bob Lutz, a former GM executive, called Tesla a "losing enterprise" and said it's "going out of business" on Friday, shortly after the company unveiled its new products.
Tesla was down 2.59% on Monday to $306.52 after Brinkman and Lutz's comments.
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