In recent weeks, analysts have downgraded Tesla shares or cut their price targets, citing concerns about the market for the Model X and potential execution issues. Barclays analyst Brian A. Johnson downgraded shares to underweight, citing significant challenges ahead for the electric vehicle maker. In addition, Johnson cut his price target from $190 to $180. Z
Johnson cited key factors such as the Model X rollout not being "the technical boost we expected," as well as causing there to be a "reality check on [gross] margins," and the potential for the slow ramp up of Model X sales to miss the already lowered 2015 delivery guidance.
Johnson's downgrade followed comments from other research firms. In the early part of October, Morgan Stanley analyst Adam Jonas cut his price target to $450 from $465 on Tesla stock, citing the initial price tag of $132,000 as being too high, forcing Jonas to cut his initial sales delivery estimates on the SUV.
Baird analyst Ben Kallo also downgraded Tesla's stock rating to neutral, citing limited visibility on positive catalysts before the Model 3 appears. Like Jonas, Kallo also mentioned the higher-than-expected price point on the X, noting "some orders will be canceled (which we have confirmed with X reservation holders), and the higher-than-expected price could reduce the market size."
Tesla is slated to report third-quarter earnings after the market close on Tuesday, with Musk expected to discuss how the company's latest vehicle, the Model X, is faring. Analysts surveyed by Thomson Reuters expect the company to lose 50 cents a share on $1.26 billion in revenue.
The company recently announced it delivered 11,580 vehicles in the third quarter, including the first units of the Model X, which was unveiled in September.
TheStreet will be live blogging the earnings, starting at 4:15 p.m.