Tesla’s Model 3 Production Deliveries Weren’t Enough To Satisfy Wall Street Analysts

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Chris White Tech Reporter
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Wall Street analysts remain skeptical about Tesla’s financial situation and ability to deliver vehicles on schedule, even after the automaker announced hitting crucial production milestones.

Tesla hit a one-week production goal of 5,000 Model 3 vehicle for the last week of the June quarter, the company wrote in a memo Monday. It still posted 40,740 vehicles versus analysts’ consensus expectation of approximately 51,000.

Tesla shares fell 7.2 percent Tuesday. The sharp decline followed news that the Silicon Valley company shifted employees from Model S to meet crucial deadlines for the Model 3, a vehicle CEO Elon Musk believes will make Tesla a force inside the auto industry.

Goldman Sachs reiterated its sell rating for Tesla shares, noting net Model 3 reservations declined to 420,000 from 455,000 in 2017. Tesla saw a sharp decline in reservations for the $35,000 vehicle as customers were forced to wait more than a year before their car gets delivered.

“Model 3 deliveries did miss our bearish estimates and we see the incremental color on Model 3 net reservations (where the company showed its first declining data point) as incrementally negative,” analyst David Tamberrino said in a note Tuesday.

J.P. Morgan analysts also claim Tesla’s shares will continue to fall after the company announces second quarter earnings.

“Given the softer overall trend to deliveries and implied negative read-across to 2Q earnings and cash flow, we expect a negative reaction in TSLA shares,” J.P. Morgan analyst Ryan Brinkman said in a note to clients Tuesday.

Tesla built 7,000 vehicles in seven days, Musk wrote in a tweet Monday. He promised investors that Tesla would make 5,000 Model 3s per week to keep his legion of critics at bay. (RELATED: Ford’s Exec Pokes Fun At Tesla For Cheering After Building 7K Vehicles In One Week)

The company has reported only two profitable quarters in eight years and is deeply in debt as analysts question the company’s viability. The critiques have prompted Musk to lash out against journalists who he believes are trying to take down the company he built. (RELATED: ‘Thin-Skinned Bully’: Elon Musk Is Owning The Media And CNN Does Not Like It)

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