Tesla’s (TSLA) stock price took a tumble (down 6% at the time of writing) today following the company’s fourth-quarter financial results released yesterday.

The concern doesn’t seem to be about the actual results as much as the outlook on the Model 3 production ramp up.

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Tesla’s stock was up following the release of the results, which came in actually slightly better than Wall Street expected, but the stock started falling today after the market digested the conference call with analysts.

Barclay analyst Brian Johnson commented on the results:

“Tesla posted a modest beat to consensus and to our numbers – but driven by ~$1/share contribution from significantly greater ZEV credits than we or likely consensus expected ($179mn vs. 10mn in our model).  Without ZEV credits, op income would have been ~150mn below us, driven by a margin that was 170bp below our assumption.  Other weak spots included losses in service and only a 5% gross margin in energy and storage.”

On the other hand, Johnson noted that cash balance came in $900 million higher than he expected – driven mainly by customer deposits for Model 3, the next-generation Roadster, and Tesla Semi, which shows strong demand.

There are also concerns over Tesla not confirming the current Model 3 production rate – though the company reiterated its current targets of 2,500 units per week in Q1 and 5,000 units per week by the end of Q2.

Johnson has a “neutral” rating and $345 price target on TSLA.

Morgan Stanley analyst Adam Jonas also noted that the cash flow looked better than anticipated:

“Prior to the release of any Tesla quarter, we ask ourselves what the one or two biggest factors will be that drive the share price the next day. In this case, we felt that the pace of cash consumption and the progress of the Model 3 ramp-up dominated our list of concerns. Tesla’s operating cash flow, net free cash flow and gross cash were all better than expected.”

Tesla’s cash position got help from a $179 million sale of ZEV credit, which surprised many analysts.

Jonas notes that it results in “Tesla entering 2018 with ample liquidity and its negative trade cycle should see a boost when the M3 ramps up.”

Though he also warns that he thinks “Tesla is fairly valued with high risk and potentially peaking expectations.” He has an “equal-rate” (hold) rating and $379 price target on TSLA.

Adam Jonas is ranked #417 out of 4,739 analysts on Tip Ranks with a 55% success rate and an average return of 12.1%. Here’s his recent track record on Tesla’s stock:

 

Brian Johnson is ranked #1090 out of 4,739 analysts on Tip Ranks with a 54% success rate and an average return of 5.6%. Here’s his recent track record on Tesla’s stock:

 

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