There\'s Finally Some Good News For Tesla

 Wayne Duggan

Following several weeks of heavy selling pressure, Tesla Inc (Nasdaq: TSLA) stock bounced on Thursday after CEO Elon Musk retweeted a new report claiming Tesla dominated the electric vehicle market in August.

But despite the positive sales checks, analysts remain skeptical of Tesla's longer-term outlook as competitors turn up the heat.

On Wednesday evening, Musk retweeted a new report by InsideEVs that claims that the Tesla Model 3, Model X and Model S were the three top-selling plug-in EVs in the U.S. in August. According to InsideEVs, Tesla sold 17,800 Model 3s, 2,750 Model Xs and 2,625 Model Ss in the month.

The nearest competition was the Toyota Motor Corp. (TM) Prius Prime (2,071 vehicles) and the General Motors Co. (GM) Chevy Volt (1,825 vehicles).

Musk's behavior on Twitter has been criticized in recent months, but he kept his tweet about the sales report succinct. "Tesla 1st, 2nd & 3rd in August sales," he said in the tweet.

TSLA stock gained 2.6 percent on Thursday morning but remains down 17.7 percent over the past year. Much of that decline came after Musk tweeted in August that he had "funding secured" for a deal to take Tesla private at a price of $420 per share. After mass confusion about the details of the deal, Musk dropped his plan to go private later in the month, citing shareholder opposition to the deal.

Goldman Sachs analyst David Tamberrino says Tesla's biggest concern is not Musk but rather a tidal wave of competition that will be coming over the next several quarters. Tamberrino also says investors should be cautious about positive near-term numbers from Tesla, which may not be sustainable.

"While we see the potential for a better near-term backdrop with growth in Model 3 production/deliveries driving positive [free cash flow] in the second half of 2018, we believe this will likely not be sustained as working capital tailwinds abate and as spending ramps back up after a period of cash conservation," Tamberrino says.

He says EV launches by competing automakers and startups will be accelerating, and Tesla will likely take a hit from the elimination of federal EV tax credits.

"Altogether, we remain bearish on the company's ability to execute, achieve its targeted production ramp/margins, and sustain FCF generation," Tamberrino says.

Goldman Sachs has a "sell" rating and $210 price target for TSLA stock.

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