Investor's Corner
Tesla (TSLA) rallies +4.5% as Wall Street shrugs off Q4 delivery miss
While the initial after market reaction to the miss in Q4 2016 production and deliveries was negative, reaction from Wall Street tell a different story as the company’s stock (Nasdaq: TSLA) quickly rallied to a 4.5% gain.
We’ve provided some market reactions from analysts watching the stock.
Colin Rusch from Oppenheimer reiterated a Hold rating on Tesla and said that “with TSLA announcing shipments of ~22.2k cars in 4Q16, we are expecting a better- than-feared trade over the next couple of days. While the company missed its 4Q16 shipment guidance by over 10% for the quarter, we believe expectations had dropped significantly below guidance due to media reports of slow sell-through. We anticipate investors will now shift focus to the Gigafactory ramp, timing of Model 3 production, and the company’s ability to generate cash from operations. We continue to be cautious about potential margin drag given simultaneous Model 3 and Gigafactory ramp plus purchase commitments for solar modules from its Buffalo facility.”
Lou Whiteman of TheStreet.com in a piece titled “Wall Street Still Loves Tesla and This Chart Proves It” stated that “While the results provided fresh fodder for the bears, they didn’t do enough to crush Wall Street’s long love affair with Elon Musk’s baby. Investors may also be optimistic ahead of a previously-planned analyst tour of the company’s Gigafactory battery facility scheduled for Wednesday.” Additionally he positively stated that “The total deliveries, though a miss, by far surpassed 2015’s total of about 50,000.” “The company has a history of missing internal deadlines, but simply showing progress towards bringing the Model 3 to market should be enough to keep bulls on board and allow Tesla to return to the capital markets to raise more cash if needed.”
TheStreet.com has been bearish on Tesla for a long time, and Lou warned that “even if the Model 3 arrives on time, there are still questions about whether the company can turn a profit on the vehicle. Tesla has targeted a base price of $35,000 for the vehicle, but skeptics including Stanphyl Capital managing member and portfolio manager Mark Spiegel estimate it might cost the company upwards of $48,000 per unit to produce the car.”
Jim Cramer, also of TheStreet.com, said on CNBC’s “Squawk on the Street” that “the market isn’t having a stronger reaction because the company seems to be coated with Teflon, meaning that it can withstand things like a lower-than-expected delivery number.” “It should be called Teflon Motors because I don’t think this will matter. Tesla seems to be “charmed,” and it’s still making a lot of cars, like Jay Leno noted,” Cramer noted. “In particular, Tesla’s sales numbers in China jumped dramatically this past year, which is “important. But regardless, people are not going to react to this news. The analysts aren’t going to change their view on it. I think that’s the important way to look at it. They’re just not going to change. No ‘buy’ to ‘holds.’”, Cramer reiterated.
In a Marketwatch story titled “Here’s why Tesla is Baird’s top stock-market pick for 2017“, analyst Ben Kallo was quoted saying that he”expects the company’s energy business and the launch of the Model 3 electric sedan will exceed expectations.” He went on saying that “Tesla energy storage business and growth opportunity is not currently reflected in share prices”. Ben named Tesla Motors (NASDAQ: TSLA) his “top pick for 2017” and reiterated an Outperform rating and price target of $338. He “does not believe the Q4 delivery number (expected by Jan. 3) will be an overhang and recommends buying shares heading into 2017 as they believe the stock will make new highs.
As I predicted on Tuesday, several unrelated reports covered the positive fact that Tesla finally begun producing batteries at the Gigafactory, lead by information coming from Tesla’s invite-only ‘investor event’. Everyone from Reuters to Bloomberg and the WSJ reported this news in their opening pages.
Cadie Thompson reported on Business Insider that Tesla began production of battery cells at its Gigafactory on Wednesday. “The battery cells currently in production will be used for Tesla’s rechargeable home battery, Powerwall 2, as well as its massive commercial battery, Powerpack 2. The electric-car maker said in a statement that it aims to begin production of battery cells for the Model 3, its first mass-market car, sometime in the second quarter.”
Tom Randall of Bloomberg, in an article titled “Tesla Flips the Switch on the Gigafactory” stated that “Musk meets a deadline: Battery-cell production begins at what will soon be the world’s biggest factory—with thousands of additional jobs.”
He goes on stating that “the Gigafactory has been activated. Hidden in the scrubland east of Reno, Nev., where cowboys gamble and wild horses still roam—a diamond-shaped factory of outlandish proportions is emerging from the sweat and promises of Tesla CEO Elon Musk. It’s known as the Gigafactory, and today its first battery cells are rolling off production lines to power the company’s energy storage products and, before long, the Model 3 electric car.”
Tom added that “by 2018, the Gigafactory, which is less than a third complete today, will be staffed by 6,500 full-time Reno-based employees and singlehandedly double the world’s production capacity for lithium-ion batteries, according to a new hiring forecast from Tesla.”
Tesla bear Michael Burry got blunt with his beliefs over the company’s valuation, which he called “ridiculously overvalued” in a newsletter to subscribers this past weekend.
“Tesla’s market capitalization is ridiculously overvalued today and has been for a good long time,” Burry, who was the inspiration for the movie The Big Short, and was portrayed by Christian Bale.
Burry went on to say, “As an aside, the Elon cult was all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now is all-in on robots — until competition shows up.”
Tesla bear Michael Burry ditches bet against $TSLA, says ‘media inflated’ the situation
For a long time, Burry has been skeptical of Tesla, its stock, and its CEO, Elon Musk, even placing a $530 million bet against shares several years ago. Eventually, Burry’s short position extended to other supporters of the company, including ARK Invest.
Tesla has long drawn skepticism from investors and more traditional analysts, who believe its valuation is overblown. However, the company is not traded as a traditional stock, something that other Wall Street firms have recognized.
While many believe the company has some serious pull as an automaker, an identity that helped it reach the valuation it has, Tesla has more than transformed into a robotics, AI, and self-driving play, pulling itself into the realm of some of the most recognizable stocks in tech.
Burry’s Scion Asset Management has put its money where its mouth is against Tesla stock on several occasions, but the firm has not yielded positive results, as shares have increased in value since 2020 by over 115 percent. The firm closed in May.
In 2020, it launched its short position, but by October 2021, it had ditched that position.
Tesla has had a tumultuous year on Wall Street, dipping significantly to around the $220 mark at one point. However, it rebounded significantly in September, climbing back up to the $400 region, as it currently trades at around $430.
It closed at $430.14 on Monday.
Investor's Corner
Mizuho keeps Tesla (TSLA) “Outperform” rating but lowers price target
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected.
Mizuho analyst Vijay Rakesh lowered Tesla’s (NASDAQ:TSLA) price target to $475 from $485, citing potential 2026 EV subsidy cuts in the U.S. and China that could pressure deliveries. The firm maintained its Outperform rating for the electric vehicle maker, however.
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected. The U.S. accounted for roughly 37% of Tesla’s third-quarter 2025 sales, while China represented about 34%, making both markets highly sensitive to policy shifts. Potential 50% cuts to Chinese subsidies and reduced U.S. incentives affected the firm’s outlook.
With those pressures factored in, the firm now expects Tesla to deliver 1.75 million vehicles in 2026 and 2 million in 2027, slightly below consensus estimates of 1.82 million and 2.15 million, respectively. The analyst was cautiously optimistic, as near-term pressure from subsidies is there, but the company’s long-term tech roadmap remains very compelling.
Despite the revised target, Mizuho remained optimistic on Tesla’s long-term technology roadmap. The firm highlighted three major growth drivers into 2027: the broader adoption of Full Self-Driving V14, the expansion of Tesla’s Robotaxi service, and the commercialization of Optimus, the company’s humanoid robot.
“We are lowering TSLA Ests/PT to $475 with Potential BEV headwinds in 2026E. We believe into 2026E, US (~37% of TSLA 3Q25 sales) EV subsidy cuts and China (34% of TSLA 3Q25 sales) potential 50% EV subsidy cuts could be a headwind to EV deliveries.
“We are now estimating TSLA deliveries for 2026/27E at 1.75M/2.00M (slightly below cons. 1.82M/2.15M). We see some LT drivers with FSD v14 adoption for autonomous, robotaxi launches, and humanoid robots into 2027 driving strength,” the analyst noted.
Tesla stock (NASDAQ: TSLA) has landed an elusive “must own” status from Wall Street firm Melius, according to a new note released early this week.
Analyst Rob Wertheimer said Tesla will lead the charge in world-changing tech, given the company’s focus on self-driving, autonomy, and Robotaxi. In a note to investors, Wertheimer said “the world is about to change, dramatically,” because of the advent of self-driving cars.
He looks at the industry and sees many potential players, but the firm says there will only be one true winner:
“Our point is not that Tesla is at risk, it’s that everybody else is.”
The major argument is that autonomy is nearing a tipping point where years of chipping away at the software and data needed to develop a sound, safe, and effective form of autonomous driving technology turn into an avalanche of progress.
Wertheimer believes autonomy is a $7 trillion sector,” and in the coming years, investors will see “hundreds of billions in value shift to Tesla.”
A lot of the major growth has to do with the all-too-common “butts in seats” strategy, as Wertheimer believes that only a fraction of people in the United States have ridden in a self-driving car. In Tesla’s regard, only “tens of thousands” have tried Tesla’s latest Full Self-Driving (Supervised) version, which is v14.
Tesla Full Self-Driving v14.2 – Full Review, the Good and the Bad
When it reaches a widespread rollout and more people are able to experience Tesla Full Self-Driving v14, he believes “it will shock most people.”
Citing things like Tesla’s massive data pool from its vehicles, as well as its shift to end-to-end neural nets in 2021 and 2022, as well as the upcoming AI5 chip, which will be put into a handful of vehicles next year, but will reach a wider rollout in 2027, Melius believes many investors are not aware of the pace of advancement in self-driving.
Tesla’s lead in its self-driving efforts is expanding, Wertheimer says. The company is making strategic choices on everything from hardware to software, manufacturing, and overall vehicle design. He says Tesla has left legacy automakers struggling to keep pace as they still rely on outdated architectures and fragmented supplier systems.
Tesla shares are up over 6 percent at 10:40 a.m. on the East Coast, trading at around $416.
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