Tesla Another Huge Loss But Higher Revenue, Model 3 Production

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Truman
Participant

Morgan Stanley analyst Adam Jonas Note on Tesla

Reiterated an Equal-Weight rating on Tesla with a $291 price target.

The analyst was cautious (as one should be) and noted:

Auto gross margins beat Morgan Stanley’s estimate by 4 percent.
Third-quarter unit volume guidance ahead of expectations.
Capex guidance of $2.5 billion below expectations of $2.8 billion.

Jonas pretty much sums it up saying the Tesla bull story is again riding on whether investors believe Musk’s targets and promises. Tesla’s operating cash burn of $543 million was much worse than the $130 million Jonas expected. Also vague guidance left a number of unanswered questions going forward.

“For example, the statement that they expect to generate positive cash ‘including operating cash inflows and capital expenditures, as well as the normal inflow of cash received from non-recourse financing activities on leased vehicles and solar products’ leaves a rather large range of outcomes for how free cash is actually created.”

Jonas questions what measures Tesla is taking to reduce its cash consumption.