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Worried About Tesla's Gigafactory? You Should Be

Worried About Tesla TSLA's Gigafactory? You Should Be

According to some analysts, President-elect Donald Trump is a "god-sent gift" to Tesla Motors Inc TSLA 0.12%, as the company's commitment to building factories and employing thousands of Americans is in line with Trump's thinking.

Tesla's CEO Elon Musk is spending billions of dollars to create high-tech factories, while other technology executives are spending billions of dollars on building new headquarters or buying back their own stock.

Unfortunately, this hopeful sentiment isn't universally shared across Wall Street.

Concerns Abound

According to a Bloomberg report, analysts at both Goldman Sachs and Morgan Stanley are concerned that Tesla's factory does little to improve visibility over the company's short and long-term plans.

Goldman Sachs' analyst David Tamberrino toured Tesla's new Gigafactory, which is now partially operating, and commented in a research report that the visit was "helpful" in providing a vision for the manufacturing process. However, the analyst added there was a "lack of quantitative updates for 2017 and the ramp expectations.''

Separately, Morgan Stanley's Adam Jonas praised Tesla's achievements in creating real innovation, jobs and technology. However, these achievements also require "real big capital requirements."

Jonas also expressed concerns surrounding a lack of details on how and when Tesla's Model 3 car will show tangible benefits.

Finally, Pacific Crest's Brad Erickson said his visit to the factory left "much to the imagination" and investors are likely disappointed over a lack of details on how the factory will reduce costs moving forward.

Image Credit: By Joehawkins (Own work) [CC BY-SA 4.0], via Wikimedia Commons

DateFirmActionFromTo
Jan 2017GuggenheimInitiates Coverage OnBuy
Oct 2016Goldman SachsMaintainsNeutral
Oct 2016Goldman SachsDowngradesBuyNeutral

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