‘Articles of faith’ feeding record Tesla stock run are not backed by fundamentals, analysts say
Fans of Tesla Inc., analysts at Barclays may have a bitter pill for you.
The analysts on Thursday used the red pill/blue pill analogy popularized by “The Matrix“ to list all the ways a reality check (a red “reality” pill, they said) is needed for Tesla TSLA, +0.53% .
Investors seem to be happy living in a constructed reality, swallowing the blue pill in their extended metaphor, in which pure momentum is carrying the stock, they said. Despite Barclays’ sell rating on the stock based on fundamentals, the analysts said they saw no data points in the near term that will reverse that momentum, thanks to the dedicated investors.
Shares are “disconnected from fundamentals,” they contended in a note Thursday.
“We don’t think 1Q EPS will matter, and while Model 3 hype is baked in, it could drive another leg up,” they said.
Thursday’s stock action bore that impression as Tesla stock gained despite the Barclay’s negativity, moving within a stone’s throw of the record close of $303.70 it notched Tuesday. Tesla shares have gained nearly 40% so far this year, compared with gains of 5.4% for the S&P 500 index.
Here what Barclay’s analysts had to say about four “articles of faith” they contend Tesla fans mistakenly hold:
‘Tesla has a significant and sustainable cost advantage in battery packs’
Tesla is likely on its way to a $100/kwh battery cost, but it may take longer than the company says, the Barclays analysts said. It has a lead right now, but competition is narrowing the gap. A narrower gap in battery cost leaves room for the scale advantages of legacy auto makers to bridge the overall vehicle cost gap versus Tesla, they said.
‘Tesla has a significant lead in autonomous driving’
Rollout of Autopilot, Tesla’s suite of advanced driver assistance systems, doesn’t mean that Tesla is ahead of competition, but rather is just willing to “beta test” on customers, the analysts said. While Tesla has aggregated significant data, the quality is unclear.
“Tesla still lacks the industrial rigor and scale required for autonomous, in our view,” they wrote....MORE