Tesla's shareholder meeting is getting some cautiously positive reviews from Wall Street analysts.
At the annual meeting on Tuesday night, Tesla CEO Elon Musk told investors that there is a "decent chance" of the carmaker achieving a record quarter across all relevant metrics, with deliveries potentially exceeding 90,000 vehicles for the quarter. After a 4% pop in pre-market trading, Tesla (TSLA) - Get Report shares were tracking 1.7% lower to $213.41 during Wednesday trading.
Musk sought to assure investors that there is no demand problem for Tesla cars, a heavily debated issue among investors amid increasing competition in the electric vehicle market.
"We think the annual meeting was a positive step towards rebuilding credibility and like the set-up into the balance of the year," wrote Baird analyst Ben Kallo on Wednesday. Kallo has an outperform rating on Tesla with a $340 price target.
Kallo pointed to several upcoming catalysts for Tesla, including the potential for second quarter deliveries to break records (an announcement is expected by July 4), and the potential for a cash flow positive second quarter. Tesla's disastrous first quarter earnings reported deliveries that fell well short of forecasts and a loss of $703 million, despite earlier promises by Musk that Tesla would begin consistently turning a profit.
Wedbush analyst Dan Ives wrote on Wednesday that Musk's "decent chance" comment bodes well for the current quarter, and noted that Tesla's product roadmap relies on the ability to scale up production of cells and battery packs. A long-time bull on Tesla, Ives recently turned bearish on the company. He now has neutral rating on the stock and a 12-month price target of $230.
"We continue to believe in the near term [that] Musk and Tesla are facing a 'fork in the road scenario' with Model 3 demand which we note Musk commented there was not a demand issue, sales are exceeding production, and ~90% are coming from non-reservation holders (new customers)," Ives wrote.
He added that for Musk to achieve a profit, Tesla still needs a "significant rebound" in Model 3 deliveries this quarter, which is still the primary hot button topic among investors, following Tesla's exceedingly weak first-quarter report that led to a weeks-long slide in shares.
As is typically the case for the highly polarizing stock, not everyone was impressed by Musk's presentation.
In a note on Wednesday, Cowen analyst Jeff Osborne, who rates the stock as Underperform with a $140 price target, lambasted the event as lacking in substance.
"This shareholder meeting consisted largely of softball questions with PETA providing the only remotely hard hitting questions that held prior promises made at the last shareholder meeting accountable. There was a lack of substance on any real financial, production, or cash flow metrics," he wrote.
He also questioned Musk's assertion that there is no demand issue for Tesla cars.
"Basic microeconomic theory would suggest that goods or services that don't have a demand problem don't see their prices lowered by half a dozen times in 4-5 months," he said, referring to various discounts applied to Model 3 cars throughout this year.
Tesla shares are down 36% year to date.