Adam Jonas, a Morgan Stanley analyst assigned to cover Tesla, has once been described by the New York Times as a ‘Tesla Cheerleader‘ for his favorable coverage of the company and always higher than average price target on Tesla’s stock.
But he has been a lot more cautious with his coverage of the electric automaker over the past few months and he now has an ‘Equal-weight’ rating on the stock with the most dreaded prediction for Tesla investors and Model 3 reservation holders: Jonas forecasts that the Model 3 will be late by over a year.
Tesla says that the Model 3 will enter production in mid-2017 with volume production toward the end of the year.
In a note sent to clients today in which he slightly reduced his price target on Tesla from $245 to $242 following the company’s third-quarter results and SolarCity acquisition, the analyst reiterated a prediction that we apparently missed before:
“We continue to forecast a Model 3 launch at the very end of 2018 (more than 1 year later than company target) with 60k units in 2019 and 130k units in 2020.”
He is not only forecasting the vehicle being late to market by over a year, but he is also predicting volumes to be significantly lower than what Tesla is forecasting. CEO Elon Musk has been talking about as many as 400,000 Model 3 sedans being produced in 2018 – compared to Jonas’ 60,000 in 2019.
It would be a major disappointment for the over 400,000 reservation holders.
Jonas has a good track record on Tesla and he was one of the rare analysts to have called the stock a ‘Buy’ before the massive stock price surge in 2013:
Though his ranking on Tip Ranks has been slipping over the past few months. He is now #624 out of 4,240 analysts – down from the top 300 earlier this year – with now a 44% success rate and an average return of 7%.
Therefore, I would take his prediction with a grain even though he is far from the only one predicting that the Model 3 will be significantly late.
In the same note, Jonas also had some good words for the automaker. He seems more optimistic about Autopilot:
“The bigger mission remains developing a sustainable transportation ecosystem. We estimate Tesla’s global fleet drives around 5 million miles per day with around 1/3 of these miles on autopilot. We also estimate the pace of daily miles traveled to double in just over 1 year, putting Tesla in a very unique position to push the state of the art of algorithmic driving and machine learning in personal transport… key pillars of accident free driving. The statistically significant safety data analysis can have a potentially powerful impact on perceptions of regulators, consumers and investors”