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Finance GOLDMAN SACHS: Tesla's production issues go beyond the Gigafactory (TSLA)

The bank has lowered its price target again for shares of the electric automaker.

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(REUTERS/Stringer)


The bears are piling onto Tesla.

Goldman Sachs has once again lowered its price target for shares of the electric automaker, citing ongoing production issues that have plagued the company for months.

"We believe Tesla could likely produce around 1,400 Model 3s sustainably at present," analyst David Tamberrino said in a note to clients Tuesday. "This is better than we previously forecast for 2Q18, but note this implies that bottlenecks are no longer just at the module line at the Gigafactory (where the company notes it can produce enough modules for 2,500 Model 3 vehicles per week) and now present at the Fremont body and final assembly lines."

Last week, CEO Elon Musk said he was back to sleeping on the factory floor to get production up to speed. It's not the first time he's moved into a Tesla factory when problems have arisen.

Despite Musk's efforts, the company still missed production targets for the Model 3 in the first quarter. To be sure, Model S and Model X production remained on target to match or exceed goals, the company said.

Because of this, Goldman has lowered its price target for shares of Tesla to $195 — roughly 35% below the stock's price of $302 Tuesday.

Further, Tesla claims it won't need to raise any more capital this year, something investors are likely happy to hear amid plunging blond prices, but Goldman Sachs isn't buying it.

"Lastly, we still expect the company to raise capital later this year given Model 3 cash burn and targeted growth projects. We maintain our Sell rating."

Shares of Tesla are up 4.7% in trading Tuesday, but down 5.4% since the beginning of 2018 as a fatal crash and resulting NTSB investigation weigh on investor's minds.