Now that CEO Elon Musk’s proposal to take Tesla, Inc. (NASDAQ: TSLA) private is off the table, investors are once again focusing on the company’s vehicle production, fundamental performance and stretched balance sheet. Tesla’s third quarter is critical, according to Morgan Stanley.
Average transaction price will be extremely important when Tesla reports its third-quarter numbers, Jonas said in a Thursday note. (See the analyst's track record here.)
The analyst expects an ATP of $56,000 for the quarter, but said ATP of $60,000 or above cound drive meaningful earnings upside.
At the same time, Tesla’s Q3 performance may not be indicative of its longer-term outlook, Jonas said.
“We believe the challenge for investors is to differentiate between what is achievable and what is sustainable."
China could become problematic for Tesla as the international trade war drags on, the analyst said. China announced last month that it plans to levy a 40-percent retaliatory tariff on vehicles imported from the U.S.
Roughly 15 percent of Tesla’s total volume in 2018 has come from China, and the new tariffs would likely make the cost of its vehicles prohibitively high in China, Jonas said.
Unless Tesla can deliver some upside surprise in Q3, the analyst said Tesla will likely need to raise $2.5 billion in additional equity capital by the end of the year.
Tesla has repeatedly said it will not need additional capital in 2018. Morgan Stanley assisted Tesla in its go-private bid before the effort was dropped Friday.
Tesla was slipping 1.31 percent to $301 at the time of publication Thursday and is now down 14 percent in the past six months.
Canaccord Cuts Tesla Price Target, Suggests New Company Leadership
Tesla Call Option Holders The Big Winners From Stay-Public Decision
Photo courtesy of Tesla.
Latest Ratings for TSLA
|Aug 2018||Canaccord Genuity||Maintains||Hold||Hold|
|Aug 2018||JP Morgan||Maintains||Underweight||Underweight|
|Aug 2018||Goldman Sachs||Suspends||Sell||Not Rated|
View More Analyst Ratings for TSLA
View the Latest Analyst Ratings
See more from Benzinga
- Canaccord Cuts Tesla Price Target, Suggests New Company Leadership
- Tesla Call Option Holders The Big Winners From Stay-Public Decision
- Tesla CEO Elon Musk: 'From A Personal Pain Standpoint, The Worst Is Yet To Come'
© 2018 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.