Citi Grows Cautious On Tesla Ahead Of Q1 Update

Tesla Inc TSLA will soon release its first-quarter production numbers, and analyst expectations span the bull-to-bear spectrum.

Here is one less-than-optimistic perspective.

The Rating

Citigroup analyst Itay Michaeli maintained a Neutral/High Risk rating on the stock without a price target.

The Thesis

Citi is already cautious of Tesla considering its enduring inability to post profits. Now, dubious demand for the firm’s catalytic product and Tesla’s insecure leadership in the autonomous vehicle space further weigh on the thesis.

Itay identifies near-term risk in the emergence of Model 3 competitors, which could weaken orders at both current and targeted average selling prices.

“Our analysis suggested a potential limited impact in competing Model 3 segments thus far,” Itay wrote in a Tuesday note. “While the analysis is rough and doesn’t cover every scenario, the results are sufficient enough to prompt us to open 90-day downside catalyst watch on Tesla shares.”

Price Action

Tesla shares were trending down Tuesday and, at time of publication, traded 2.3 percent below the open at a rate of $297.21.

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