While most technology shares jumped on Friday on blowout earnings from the likes of Amazon and Alphabet, one key member of the hot-tech-stock crew is not participating: electric car-maker Tesla.
Shares of Tesla fell 1.6 percent in premarket trade after Evercore ISI, commenting on Tesla’s persistent production problems, downgraded the stock to in line from buy on Friday.
“Tesla is clearly running behind schedule with respect to the Model 3 ramp,” wrote Evercore ISI analyst George Galliers. “Clearly third-quarter production was weaker than Tesla expected with 260 Model 3s produced vs. a targeted ‘just over 1,500.’ And, at this point, we have little insight into how production is running.”
A report that the car-maker plans to cut its orders for Model 3 parts sent shares of Taiwanese auto parts maker Hota Industrials tumbling more than 7 percent overnight and also weighed on Tesla shares Friday. Tesla, Reuters said citing local media, appears to have told the firm it would cut orders to 3,000 sets per week, down from prior estimates of 5,000.
Tesla did not immediately respond to CNBC’s request for comment. The stock is still up 53 percent for the year, though it is down 4 percent for October going into Friday’s trading day.
Galliers’ price target of $312 represents 4 percent downside from Thursday’s close.
This isn’t the first time analysts have voiced skepticism over Tesla’s production problems. Goldman Sachs analyst David Tamberrino, also citing Model 3 production issues, reiterated his sell rating and predicted 40 percent share downside over the next year in a note earlier this month.
Jefferies analyst Philippe Houchois also joined the discussion on Friday, adding that while cash flow could surprise to the upside, he’s still skeptical on near-term production potential.
“As important as numbers will be management’s willingness to provide a credible path to Model 3 ramp-up,” wrote Jefferies analyst Philippe Houchois on Friday, referring to the company’s earnings report on Nov. 1. “Our Underperform rating reflects our doubts about the scalability of the business model to a level of margin that would support current valuation multiples.”
Source: Tech CNBC
One hot stock not participating in Friday's tech rally — Tesla