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Analyst Downgrades Tesla to Sell, Despite Carmaker Finally Reaching Production Goal
Although Tesla was able to finally hit its production goal of 5,000 Model 3 units in one week – albeit with some caveats – it wasn’t enough to save the company’s stock from being downgraded by CFRA Research, which is skeptical that the carmaker will be able maintain that pace.
The company revealed in a regulatory filing on Monday that it had produced 5,031 Model 3s in the last week of June, the first time it has been able to reach that goal, as CNN Money reports. Fresh off hitting that mark, Tesla is now ratcheting up its ambitions by saying it expects to produce 6,000 Model 3s a week by the end of next month.
Founder and CEO Elon Musk was understandably in a celebratory mood after hitting its mark.
7000 cars, 7 days
♥️ Tesla Team ♥️
— Elon Musk (@elonmusk) July 1, 2018
However, Tesla’s new milestone did little to sway CFRA Research, which downgraded the the carmaker’s stock to sell, doubting that it will be able to sustain its production numbers. Per CNBC:
Tesla said on Monday that the carmaker reached its one-week production goal of 5,000 Model 3 cars for the last week of the June quarter. But the company fell short on its second-quarter deliveries by posting 40,740 vehicles delivered versus the Wall Street consensus of approximately 51,000.
“After Herculean efforts and albeit a few hours after a self-imposed deadline, Tesla finally achieved its latest goal to reach production of 5,000 Model 3 sedans per week. In the interim, we do not see this production rate as operationally or financially sustainable,” analyst Efraim Levy said in a note to clients Monday.
Tesla shares declined 2.8 percent after the report after opening up 5 percent at the beginning of Monday’s session.
Nonetheless, Musk was not going to let a little downgrade ruin his excitement over hitting the milestone. Bloomberg got a hold of a memo Musk sent to employees congratulating them:
“We did it!! What an incredible job by an amazing team. Couldn’t be more proud to work with you. It is an honor.
“The level of dedication and creativity was mind-blowing. We either found a way or, by will and inventiveness, created entirely new solutions that were thought impossible.
“Intense in tents. Transporting entire production lines across the world in massive cargo planes. Whatever. It worked.
Musk ends the memo by saying that he thinks Tesla “just became a real car company.”