Tesla (NASDAQ: TSLA) has seen something of a second wind in the past few weeks. While demand for the first quarter was woefully low, the automaker has seen demand surge to a much higher level than previously expected.
While Tesla is now matching Wall Street’s lofty expectations, some analysts are warning that there aren’t any more rabbits Musk can pull out of his hat to bolster the company’s stock.
Goldman Sachs analysts led by David Tamberrino went on to say that there’s nothing else left to push demand for Tesla’s stock back up to previous heights. While shares surged when CEO Elon Musk told shareholders that demand for Tesla vehicles has shot up to a record quarter in terms of sales and production, gaining as much as 18 percent so far this month, many are saying that this surge isn’t going to last.
“We believe that is the largest question for investors to underwrite at this point — what are sustainable demand levels for the Model S, Model X, and Model 3 — and how does that change with the introduction of Model Y production,” the analysts said according to MarketWatch. “While there is potential upside surprise from a faster ramp or pull forward of Model Y ahead of schedule … there is likely cannibalization of current Model X and Model 3 product demand with a crossover variant.”
While Tesla has already deployed a cheaper version of their car, the Model S, with a lease option as well, whatever increase in demand this could see would likely be mitigated as federal tax credits get cut on July 1st.
Tamberrino said that the second quarter was in a unique position, having a better environment for demand and deliveries, but that this wasn’t sustainable. At the same time, the analysts said they expect Tesla’s share of the electric vehicle market to decline by 2025, falling from a 30 percent share to only 20 percent as the market grows and competitors increase.
Tamberrino is known for being one of the most bearish analyst voices on Wall Street when it comes to Tesla, an opinion that’s become increasingly common so far in the year.
In response to the news, Tesla’s stock ended up dipping by 3 percent, ending the day at just under $220 per share. The past six months have seen share prices decline from the $350 price range earlier this year down to below $200 in June.
While the recent comeback has relieved many Tesla bulls, it’s uncertain whether or not the electric vehicle maker can stage a comeback amidst the other challenges it is facing.
Tesla Company Profile
Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles.
It sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. The Tesla Roadster debuted in 2008, Model S in 2012, Model X in 2015, and Model 3 in 2017. Global deliveries in 2018 were 245,506 units. Tesla went public in 2010 and employs about 50,000 people. – Warrior Trading News