Tesla Motors shares plunged after last night’s earnings report on the back of a disappointing cut in delivery guidance for the full year. The stock fell as much as 10.21% to $242.55 per share during regular trading hours today.

Tesla Motors Inc (TSLA) Earnings Highlight Execution Risks

Analysts are weighing in on last night’s report, and as always, the bulls found plenty of things to like despite the widespread disappointment. Most firms noted that the execution risk at Tesla is quite high and that the automaker’s second quarter performance demonstrates this.

Still long term potential for Tesla (TSLA)

Deutsche Bank analyst Rod Lache and his team reported that Tesla’s results were about as they expected. They maintained their Hold rating on the EV manufacturer, noting that management’s adjustments in revenue, delivery and margin guidance suggest that the trajectory of the Model X launch will be slower than previously expected.

Tesla management had guided for about 55,000 deliveries this year, but in last night’s report, they pulled back their projection to between 50,000 and 55,000 deliveries. Gross margins without zero emission vehicle credits are expected to remain in the high 23% range, coming up short of Lache’s estimate of 25% to 26%.

Despite these moderations, they still see long term potential for Tesla. Demand for the Model S, the large number of orders for the Model X, and huge demand for the Tesla Energy storage products with about a $1 billion order backlog are encouraging. They estimate that Tesla could sell between $400 million and $500 million worth of its energy story products next year.

Tesla (TSLA) faces execution risk

JPMorgan analyst Ryan Brinkman and his team noted that Tesla’s gross margin miss was the result of higher than expected manufacturing costs and inefficiencies in production. Because of that miss, they’re now expecting Tesla to swing to a loss for the third quarter, whereas they were previously expecting a profit. They say this is similar to what happened in the fourth quarter of last year.

They also observed that Tesla management appeared to have backed away from their previous expectation of positive cash flow. The reason for this is because it now is contingent on where in the 50,000 to 55,000 delivery range the company falls.

Jefferies analysts Dan Dolev and Trevor Young, however, said Tesla’s free cash flow is “more than meets the eye. They explained that after adjusting for lease financing, cash flow for the second quarter would have been -$41 million and that it would have been positive if adding back in the $79 million planned inventory increase were added back in. Most of that increase was from orders that were in transit for delivery in the third quarter. They also said Tesla management expects to be cash flow positive in the first quarter of next year.

Tesla (TSLA) may raise capital

The Jefferies team suggested that Tesla might have to raise equity, but they also noted that management highlighted that of their $750 million credit line, $700 million is still available. Barclays analyst Brian Johnson also suggested that a capital raise might be in Tesla’s near future. He warned that if Tesla again misses guidance in the fourth quarter, as he expects, cash burn will become a serious concern.

Recall that Tesla guided for a gross margin of 30% on the Model S by the fourth quarter of this year, but the automaker appears poised to miss this.