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Musk Confronts Wall Street Divided on Tesla in Plea to Workers

  • One-year share-price targets range from $160 to $500
  • Musk asks workers to cut costs ahead of planned capital raise

Elon Musk’s latest admonition to Tesla employees -- produce more, spend less -- is no simple belt-tightening before he asks investors for more cash. It also reflects Wall Street’s schism about the health of the electric-car maker.

Musk urged workers to cut costs and deliver “every car we possibly can” in an Aug. 29 e-mail obtained by Bloomberg News on Friday. Showing positive cash flow this quarter will make it easier for Tesla Motors Inc. to raise funds in the year’s final three months to complete the new Model 3 vehicle and its so-called gigafactory that makes batteries.

“We will be in a far better position to convince potential investors to bet on us if the headline is not ‘Tesla Loses Money Again,’ but rather ‘Tesla Defies All Expectations and Achieves Profitability,’” Musk wrote. “That would be amazing!"

The chief executive officer’s message shows the urgency of making a good impression on Wall Street, where analysts are split about Tesla’s prospects. Of 19 analysts surveyed by Bloomberg, as of Friday seven had a buy rating, seven had a hold, and five recommend selling the shares. Colin Langan of UBS Securities has the lowest 12-month price target, at $160 a share, while Charlie Anderson of Dougherty & Co. has the highest, at $500. The stock, down 18 percent this year, closed at $197.78 at the end of last week.

The gap between analysts’ estimates isn’t a typical bull versus bear divide. It’s a starker division: Call it the Fundamentalists versus the True Believers.

The Schism

Fundamentalists cringe at the company’s cash burn, along with the number of projects that Musk has bolted on to the electric-car company. The more bullish analysts tend to believe in the billionaire’s long-term vision of a greener future, with Tesla’s formidable brand leading the way.

“Our $160 price target is based on our discounted cash-flow analysis, which is a fundamental...