Analyst: Additional Model 3 Production Shutdowns Would Be Negative For Tesla Stock

Tesla Inc. TSLA is shutting down Model 3 production starting Saturday in an effort to make changes to improve its production process and alleviate the bottlenecks that have caused the company to miss their production targets in recent quarters. The planned event is part of the 10 days of shutdowns Tesla previously announced for the quarter, and one analyst said in a Friday note that it had better be the last. 

The Analyst

GBH Insights head of technology research Daniel Ives reiterated an Attractive rating on Tesla with a $320 price target.

The Thesis

Tesla is on track to hit its near-term production target of 5,000 Model 3s per week by early July, Ives said in the note. (See the analyst's track record here.)

Tesla has taken a lot of heat for repeatedly missing its Model 3 production targets, but the company is still in a good spot if it can get on track in the near future, the analyst said. 

On the other hand, Ives said investors may not have the patience for any further delays.

“Any further shutdowns and bottlenecks could be the straw that broke the camel’s back toward hitting the 5,000 target, which remains the key risk to the story along with the cash burn situation [and] potentially raising capital in 2019,” Ives said.

The coming months are pivotal for Tesla stock, as the company either proves it can push past its temporary production problems or demonstrates its execution issues are here to stay, Ives said. 

Price Action

Tesla stock was down 0.32 percent at the time of publication Friday and is now down 21.3 percent in the past three months.

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Photo courtesy of Tesla.