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Goldman Sachs, Morgan Stanley Gave Warning to Tesla’s Gigafactory

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Tesla Motor’s Gigafactory was touted as the future of high-tech manufacturing and was praised far and wide after it began production on Wednesday, but Wall Street analysts had a different take on things as reported by the Financial Review.

Morgan Stanley and Goldman Sachs were among the firms raising concern that a tour of the facility did little to change their views on the company’s short-term financial prospects just a day after Tesla reported Q4 deliveries that missed its own forecasts.

According to David Tamberrino, team lead of Goldman, overall, they found the tour helpful in showing the layout and process for manufacturing lithium-ion battery cells and packs for its automotive and energy products. But quantitative updates for 2017 and the ramp expectations were lacking.

Although investors have sent Tesla shares soaring more than 20% in the past month, Wall Street’s focus remained fixed on profits, with Adam Jonas of Morgan Stanley raising concern over the cost of the factory.

Jonas is also worried about the lack of details on how and when the Model 3 would benefit, but he remained sceptical about the vehicle’s potential for advancements in autonomy and possible additional body styles.

Tesla shares went down 1.5% to US$224.57, or about 10% below the present average 12-month price target for shares, according to the data collected by Bloomberg.

The start of production marked the 3rd successful target the company met for the New Year with Elon Musk fulfilling his promise to complete a big battery storage project and to cascade and roll out promised software upgrades to cars equipped with the new Autopilot hardware.

Click here to read the full story on the Financial Review


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