Goldman Sachs' reiterated sell rating call on electric car maker Tesla (TSLA - Get Report) is getting a lot of attention on Monday. But, Wall Street's Tesla bulls may want to scroll down and read the rest of the report for more shock and horror.
The investment bank sees Tesla's stock cratering more than 36% to $205 as it misses deliveries across the board for the first-quarter. "Based on the quarter-to-date February cadence, we believe the company is tracking below its 2018 Model S/X guidance of approx. 100,000 units (an implied 25,000 per quarter)," writes Goldman analyst David Tamberinno. "Further, while monthly Model 3 deliveries are showing sequential improvement, we estimate that they will fall well short of consensus expectations."
Tamberrino adds, "We see the potential for the combination of the slower ramp in volumes and early concerns of vehicle quality/user interface software issues as key areas of focus for deposit holders. In that vein, we see potential for Model 3 depositors to cancel their orders. Should this occur, we believe shares could see significant pressure in 2018."
But it's the financial modeling Goldman has done on Tesla that should really terrify the bulls. Goldman sees a long-term debt explosion at Tesla looking out to 2020 as the company burns through significant amounts of cash flow. Weak cash generation trends will come, at least according to Goldman, as Tesla doesn't sniff a profit until 2020 and boosts capex to support the Model 3, Tesla Semi, the Roadster and whatever else CEO Elon Musk has in mind.
Unclear from Goldman's spreadsheet is to what degree Tesla will be harmed by increased competition in the electric car space by Ford (F - Get Report) , General Motors (GM - Get Report) , Toyota (TM - Get Report) , BMW and others.