Reuters - Tesla shares recouped some of their losses on Thursday after falling as much as 3.6%, a day after it pushed back a production target for its much-anticipated Model 3 sedan yet again.
Analysts stayed upbeat, saying the electric car maker had finally set an achievable target for their mass-market saloon that is priced at $35,000. The delay, however, is likely to impact Tesla’s cashflow, a big challenge for many quarters now.
Tesla said on Wednesday it would likely build about 2,500 Model 3s per week by the end of the first quarter, half the number it had earlier promised. The company now expects to reach its goal of 5,000 vehicles per week by the end of the second quarter.
“With absolute Model 3 sales tracking behind expectations and Model 3 gross margin improvement likely to be pushed out until production reaches greater scale, the expected cash tailwind from Model 3 will take longer to manifest itself than was anticipated,” Evercore ISI analyst George Galliers said in a note.
Tesla, headed by Elon Musk, has been struggling to overcome production bottlenecks and reported its biggest-ever quarterly loss in the July-September quarter.
The company burned through $1.1bn in cash in that quarter and said in November it would spend roughly the same amount in the fourth quarter. It had about $3.5bn in cash and cash equivalents as of September 30.
Chief financial officer Deepak Ahuja had reassured investors that cash flow would “improve significantly” over the next few quarters as Tesla continued to ramp up Model 3 production.
Tesla shares ended at $314.62 in Thursday´s trading session, a loss of just 0.83% on the day. The median price target on the stock is $310 and eight of 25 brokerages covering the stock rate it “buy” or higher. Eight have a “hold” rating and the rest a “sell” or lower.