Barclays bank's analysts, who examined the company's 98-page regulatory filing, found obstacles in the celebrated electric-car maker’s path which show that things are far from perfection.
The report evaluated Tesla's stock which was 3% down at the beginning of this week, while the company lost 15% in its shares during the past three months.
The good news is that Tesla is on track with the development of its two new models: the Model X, the SUV expected to be on sale this summer, and the mass-market Model 3, expected to be ready for sale in two to three years, according to its most recent 10-K filing for the Securities and Exchange Commission.
“The bulls we walk with advise us to pay no attention to short-term financials,” the Barclays analysts said. To them, it’s all about whether Tesla will eventually disrupt the auto industry with its mass-market electric car.
From that perspective, the 10-K offered “some solace” and prevented Barclays from becoming more negative on Tesla. The bank kept its “equal weight” rating on the stock.
The Barclays analysts did pay attention to short-term financials, finding three things to worry about.
Tesla seems to stop following its "build-to-order" model
In the 10-K, Tesla described its finished-goods inventory of nearly $400 million as including “a smaller portion of vehicles available for immediate sale” beyond loaners and showroom models.
“This is a departure from the past — indicating that Tesla production is not as much of a build-to-order model as it had been historically,” the analysts said.
It’s not spending that much on its battery factory
Tesla’s capital spending mostly has been focused on Model S and Model X upgrades, not on its battery factory under construction outside Reno, Nev.
Tesla has spent about $107 million on the “gigafactory” to date, plus some other “minimal” spending related to the plant.
“This is yet another reminder that Tesla financials have yet to feel the impact of spending” toward the mass-market Model 3, Barclays said.
Pre-delivery prepayments in customer deposits
Customer deposits used to be a gauge of order activity. Tesla now includes prepayments to that line item, making it “more difficult to gauge underlying order activity,” Barclays said.
Barclays’ equal
weight rating on Tesla stock is based on the opinion that shares are
fairly valued at the moment, says MarketWatch.
Barclays has a price target of $190 on the stock, which is nearly 7% downside from Tesla’s Friday close.
