A Wall Street analyst who has been Tesla’s most vocal cheerleader issued a cautionary report Monday warning that continued losses, delays in launching new models and low gas prices will bring the company’s meteoric stock trajectory closer to earth.
The company’s stock rose anyway, largely fueled by reports that CEO and co-founder Elon Musk exercised 532,000 stock options priced at $6.63 each and is investing more than $100 million into the company.
Separately, Tesla has applied for a Michigan dealership license to sell new and used cars.
In Michigan, state franchise law bans Tesla from selling cars directly to buyers or from opening Tesla retail locations. There also is a requirement that the dealership have a repair facility or a relationship with an established repair facility.
Adam Jonas, Morgan Stanley auto analyst, cut his target price for the Palo Alto, Calif.-based electric car manufacturer from $450 to $333. He also said the postponed launch of the Model X crossover may have added hundreds of millions in costs and caused some prospective customers to look for alternative products.
The Model X finally came to market in late 2015, two years later than first expected. Last week, Tesla sued Hoerbiger Automotive Comfort Systems, saying the German supplier failed to live up to its promises for the capability of falcon-wing doors on the Model X.
Another vehicle, the Model 3, meant to be more affordable, was slated for introduction in 2017, but Jonas said it may not be ready for market until late 2018.
“Low demand for electric vehicles categorically and globally, in a $30 oil environment leads us to reduce volume assumptions for the Model 3,” Jonas wrote. He now expects Tesla to sell 246,000 cars annually by 2020, less than half the 500,000 Musk has forecast.
But Tesla shares still rose midday Monday, up $3.99 to 195.19. But the stock has fallen more than 30 percent since its peak of $286.65 last July.
Last week, Ford beat Wall Street expectations for its fourth-quarter results by 7 cents per share and said it would post a 2016 pretax profit equal to or higher than last year. The stock barely budged.
On Wednesday General Motors will release its fourth-quarter 2015 results.
Tesla, which will report fourth-quarter financial results next week, lost an adjusted 58 cents a share on $1.24 billion in revenue in the third quarter. Analysts expected the company to lose 50 cents a share on $1.26 billion in sales.
After nearly breaking even in the fourth quarter of 2013, Tesla’s losses have grown steadily over the past seven quarters.