The Model S buzz has come and gone, and now at least one analyst is shifting into reverse when it comes to Tesla Motors
Wunderlich Securities analyst Theodore O'Neill is dramatically downgrading shares of the electric car darling, going from buy to an outright sell. His price target is also receiving a buzz cut, going from $49 to $28.
He has his reasons.
Analysts and investors began to wax bullish on the company after hearing that the company's breakthrough sedan would begin shipping last month, a month earlier than the market was expecting. However, O'Neill feels that production issues will keep revenue low in the near term. The analyst sees Tesla posting a wider loss than his peers do on revenue of $86 million. The Wall Street top-line average is currently at $130 million.
If O'Neill is right about early production setbacks, it would naturally lead the market to sour on the company, though it probably won't get in the way of the long-term growth story here.
Electric cars have been a hard sell, and not just because gas prices have been defying seasonal trends by actually falling in recent months.
The high prices of electric cars -- even after juicy government rebates -- continue to scare away drivers. However, as most automakers roll out plug-in models of their popular cars, the climate will change.
By the time that Tesla is truly up to speed with the production of its Model S sedans -- and eventual Model X crossover SUVs -- electric cars won't seem that rare at all.
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Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.