Tesla (TSLA) shares spiked this week after the website Electrek reported on a leaked email from CEO Elon Musk telling employees the electric car maker has “a shot” at delivering a record 100,000 cars by the end of the third quarter.
But there’s one market watcher who prefers to err on the side of caution.
“You’ve got to give them credit for what they’ve done in the last two quarters, but ultimately I view that as the start of what’s going to be a challenging period ahead,” said Dan Ives, Wedbush Securities managing director on The Ticker.
“It comes down to the street’s skepticism and ours around what that looks like from a profitability perspective… demand is going to wane as we go into next year,” he added. Put another way, he said, “If I’m a bull right now, I’m not popping the champagne yet for Tesla,” he said.
Tesla achieved its global delivery record last quarter, delivering over 95,000 electric cars, and if Musk is right, it should be set for another record-breaking quarter. But that’s not enough for Ives, who remains wary of Tesla’s outlook.
“I view this as being no different from… if you look at an NFL team, they only get four wins in the season,” said Ives. “Good for those wins, not a good season.”
Ives predicted that this quarter’s delivery range would be 88,000-90,000 units. He maintains a neutral rating on the stock and a 12-month price target of $220. He believes the drag will be from “U.S. demand and improved European trajectory, coupled by pockets of weakness in China.”
“China is really the fuel in the engine for Musk and Tesla going forward,” he said. “Not just with Giga 3 in China, but also in terms of overall demand there.”
Tesla is “doubling down” on China, seeking to boost its local team at the Shanghai factory with over 200 jobs are listed on its website.
Ives said next year it’ll all be about China and Europe for Tesla — that’s why its Gigafactory 3 is important. He said while the company is in the driver’s seat for the electric vehicle market, its future tied to China is really is “a fork in the road” for the carmaker.
Grete Suarez is producer at Yahoo Finance for YFi PM and The Ticker. Follow her on Twitter: @GreteSuarez