Tesla Motors Inc (TSLA) Gives Investors A Reality Check, Shares Tank

Tesla Motors Inc (NASDAQ:TSLA) shares had overshot over the past few months, Barclays analyst Brian Johnson said in a research note to analysts. Though losses for the third quarter narrowed, the company projects lower than expected Model S deliveries during the fourth quarter. Johnson says the lower delivery forecast by Tesla Motors Inc (NASDAQ:TSLA) reinforces his view that the stock is valued more properly at $141 a share.

Tesla Motors Inc (TSLA) Gives Investors A Reality Check, Shares Tank

Tesla’s Q4 forecast misses estimate

The California-based automaker reported Tuesday that it incurred a loss of $38 million or 32 cents a share on revenues of $431 million on a GAAP basis. Analysts polled by Thomson Reuters expected a loss of 25 cents. Using the non-GAAP method, Tesla Motors Inc (NASDAQ:TSLA)’s adjusted earnings stood at $15.9 million or 12 cents compared to Barclays’ estimate of 17 cents a share. Adjusted revenue stood at $603 million for the quarter ending September 30. Johnson said results were not encouraging. Tesla Motors Inc. (NASDAQ:TSLA) had lost $111 million on revenues of $50 million in the corresponding period last year.

Alluvial Fund August 2020 Performance Update

Alluvial FundAlluvial Fund performance update for the month ended August 31, 2020. Q2 2020 hedge fund letters, conferences and more Dear Partners and Colleagues, Alluvial Fund, LP returned 4.8% in August, compared to 7.2% for the S&P 500 and 5.6% for the Russell 2000. Year-to-date, Alluvial has returned 6.6% versus 9.7% for the S&P 500 and Read More

Tesla Motors Inc (NASDAQ:TSLA) delivered 5,500 Model S cars in Q3, including more than 1,000 in Europe. That was well below Barclays’ estimate of 5,850. The company forecasts 6,000 Model S deliveries in the current quarter, compared to Johnson’s expectation of 6,603. Excluding ZEV credits, gross margins came at 21%, beating Barclays’ forecast of 19.4%. Though the company had free cash flow of $26 million as of September 30, it expects FCF to be “about break even” in Q4.

Tesla is production-constrained

In a conference call with analysts, Tesla Motors Inc (NASDAQ:TSLA) founder Elon Musk said the company is facing production constraints despite strong demand. He said the company will boost R&D spending by 25% in Q4. The company plans to enhance its Model S and the upcoming Model X SUV. Tesla Motors Inc (NASDAQ:TSLA) is also increasing its network of stores, service centers and supercharging stations.

Tesla Motors Inc (NASDAQ:TSLA)’s third quarter results disappointed investors, sending shares down 12.34% to $155 in premarket trading. Barclays has a neutral rating on the stock with $141 price target.