Shares of upstart electric car maker Tesla Motors Inc. fell 3.6 percent Wednesday after a Wunderlich Securities analyst said the company probably will reduce third-quarter production of the Model S sedan.
In a note to investors on Wednesday, analyst Theodore O’Neill downgraded the Palo Alto, Calif., company to “Sell” from “Buy.” He also cut his 12-to-18-month price target on the stock from $49 to $28 per share, and he raised his third-quarter and full-year loss estimates.
Even though Tesla has reiterated it intends to produce 5,000 Model S cars for 2012, O’Neill isn’t sure how the company can achieve this.
The analyst notes that the company now says it will produce 500 cars in Q3, down from a previous projection of 1,000. “All the Street estimates assume 1,000 cars and so there will be inevitable cuts to estimates,” he writes.
Tesla is relying on the Model S and eventually the Model X to move it to profitability. Tesla is expected to report negative earnings of $2.44 per share for the entire year, according to reports by JAGS and Daily Political.
Tesla Motors, Inc. (Tesla) designs, develops, manufactures and sells electric vehicles and advanced electric vehicle powertrain components.
TSLA shares slid to $32.15 at close, a major 7.3 percent decline from yesterday. It is Tesla’s most significant decline since April 4.