Tesla Inc (NASDAQ:TSLA) shares surged earlier this week following a show of shareholder confidence in its leadership at its annual meeting.
While the electric car company has struggled to meet production goals, CEO Elon Musk told investors it’s likely that Tesla will meet its weekly production goal of 5,000 cars by the end of the month. Musk also claimed once the company meets that goal, it will be cash-flow positive and will not need to raise more capital.
Morgan Stanley analysts were not swayed, maintaining an Equal-Weight rating with a price target of US$291.
Analysts disagreed with Musk’s timeframe to meet the production goal, forecasting that the company won’t meet its 5,000 per week goal for until 2019.
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While Musk said he expects the company to achieve positive GAAP profit by the third quarter of 2018, analysts don’t see that happening until 2020.
The company believes it will have a positive free cash flow by the second quarter of 2018. Analysts disagreed with that as well and don’t see that or a positive GAAP net profit until 2021.
Musk has taken to Twitter to assure investors that Tesla will not need to raise capital and reiterated this at the shareholder meeting, but the analysts aren’t buying that.
“If Tesla can get through 2018 without raising equity, it would represent a material upside surprise to investors,” wrote the analysts in a note. The analysts foresee Tesla raising US$3bn at US$280 by the third quarter of 2018.
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Tesla has been planning an expansion into China, working with the Chinese government to build a factory in Shanghai. While Tesla currently sells vehicles there, each car is subject to a 25% import tax which pushes it out of the price range of some consumers.
Morgan Stanley analysts entertained the possibility but highlighted roadblocks in Tesla’s path to China.
“While we are prepared for an announcement on Chinese capacity additions, our view is that Tesla's ability to access the Chinese shared autonomous transport market will be limited by data privacy and national security issues," wrote analysts.
Shares of Tesla were up less than 1% to US$317.78 in Friday pre-market trading.