Barclays weighs in on Tesla

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    Barclays (UW) PT: $210, out Thursday:

    2017 for Tesla was the “Year of the Model 3”…so naturally 2018 is shaping up as “Year of the Model 3, Part 2” (that is, unless Tesla makes a move into blockchain or Bitcoin). We think Tesla’s 4Q delivery release provided several key insights around Model 3 in ‘18 – a) ultimately production delays may become an issue; b) what to expect in the ramp; and c) timing for a fundraise will depend on the ramp.

    Ultimately, production delays may become more of an issue: The press release, which was highlighted by yet another delay in the target of reaching 5k/week Model 3 production, is actually the third time in 20 mo. that Tesla is straying from formal targets. We acknowledge that if the product is viewed positively by consumers (and we believe for now Model 3 is the most compelling EV option at its price point), the delays will ultimately be meaningless. Yet at some point, the delays may become more of an issue if they persist – credibility may fray (potentially limiting access to the capital markets), a longer ramp invites greater risk of competition, and longer delays mean fewer 3 buyers will be eligible for the coveted $7500 federal tax credit on EV purchases.

    We believe a fundraise will be necessary for Tesla in 2018; given our forecast of an FCF burn of $4.2bn, we assume an equity raise of $2.5bn

    And from Bloomberg:

    Of course, if [this] doesn’t bother you, then consider yourself lucky. Not only are you untroubled by the missed targets, the periodic dilution and the growing competitive threat from other car companies, there’s an added bonus: You need hardly take a minute to read a Tesla announcement at all.

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