What happened
Breaking a two-day winning streak Wednesday, shares of Tesla (TSLA +2.40%) stock gave back 2% as of 1:10 p.m. ET.
I think you can blame Bernstein for that.
Image source: Getty Images.
So what
The news today on Tesla is mostly of the good-news variety:
- Australian lithium miner Liontown Resources announced that it has agreed to devote roughly one-third of its production of lithium spodumene concentrate to Tesla for use in manufacturing electric car batteries beginning in 2024.
- Minnesotan nickel-miner Talon Metals said that it now has a deal to sell 75,000 metric tons of nickel to Tesla -- also for use in making car batteries.
Put those two news items in a blender and mix well, and it sure sounds like Tesla is laying the groundwork for building a whole lot of batteries -- and selling a whole lot of new electric cars.
Now what
Now here's the problem: Into this happy news day waltzed investment banker Bernstein this morning, to announce its displeasure with Tesla's decision not to develop a $25,000 Model 2 mass market electric car this year. As StreetInsider.com reports, Bernstein thinks that "without offerings that address mass market price points (<$30K) we struggle to see how Tesla will be able to grow at 50%+ beyond 2023."
Annual sales growth of 50% implies 3 million units sold in 2024 and nearly 5 million units sold in 2025. And Bernstein simply doubts that there are that many millions of car buyers out there willing to lay out $100,000-plus for a new Model X electric SUV, nearly $100,000 for a Model S electric sedan, or even $45,000-ish for a (relatively) cheap Tesla Model 3. Given that Bernstein doesn't see Tesla offering a $25,000 car before 2025, "if at all," the analyst sees most projections of 50% long-term growth for Tesla as pipe dreams that will not work out in reality.
Accordingly, Bernstein rates Tesla stock underperform (i.e., sell) with a $300 price target.
