'Wait and See' on Tesla (TSLA), Oppenheimer's Rusch Tells CNBC
NEW YORK (TheStreet) -- Shares of Tesla Motors (TSLA) - Get Report are up by 4.26% to $226.02 on Monday afternoon, after CEO Elon Musk tweeted Sunday about the second part of his "top secret Tesla master plan," which he hopes to publish later this week.
Colin Rusch, Oppenheimer Managing Director and Senior Analyst, thinks the mystery tweet is not a gimmick but advises against coming to any conclusions at this point.
"We've seen a really significant shift in what [Tesla's] up to," Rusch said on CNBC's "Power Lunch." "We want to wait and watch and see what [Tesla's] talking about and see when these guys actually start generating real operating cash."
The news of a second part of Musk's Tesla masterplan comes after several recent shocks to the company's stock, one from investigations into a Tesla car crash and another from question regarding Tesla's plan to acquire Musk's solar panel company SolarCity (SCTY). Rusch saw Tesla's first quarter delivery results and cash flow generation as "an understandable miss" which led to a "a real shift in strategy" to accelerate production on the Model 3.
"We want to look at return on capital ... we thought [Tesla] had better uses of that capital than buying Solarcity," Rusch noted in reference to Oppenheimer's recent downgrade of Tesla stock to "market perform."
Oppenheimer expected the recent crash as "inevitable" due to new operator behavior that will necessarily lead to new regulations. Rusch says, "investors that have been involved in Tesla look at this functionality and say this is a massive departure for how people are operating motor vehicles ... this is just the precipitating event to that process beginning."
Additionally, Oppenheimer believes Tesla will meet about 60 of its delivery goals as they "are very ambitious targets."
"If they get part of the way there, that will be a major success," Rusch added.
Separately, TheStreet Ratings team rates Tesla Motors as a "sell" with a ratings score of D+.
This is driven by multiple weaknesses, which TheStreet Ratings team believes should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks TheStreet Ratings covers. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: TSLA