Model 3 Reservations Could Provide Positive Catalyst for Tesla (TSLA) Shares - Credit Suisse
Credit Suisse analyst Dan Galves reiterated an Outperform rating and $240 price target on Tesla Motors (NASDAQ: TSLA), saying initial Model 3 reservations are likely to be a positive.
Tesla is holding Model 3 unveil event on Thursday March 31 at 8:30PT.
"We don't expect much incremental information about the car vs what Tesla has already said... a dynamic that has typically resulted in "sell the news" price action," Galves said. "However, the real catalyst from the Model 3 unveil will be the first indication of demand for the car, in terms of initial reservations…and we think this will be a positive surprise."
In terms of numbers, they expect 100,000+ in the first several weeks.
Galves sees two key population pools, in their view: 1) The ~107k current Model S / X owners. Very few owners we've spoken to will NOT place a Model 3 reservation. 2) Those who have test-driven Model S, but can't afford it.
"Of the consumers who testdrive Model S, we estimate that only about 15% actually buy the car (typical auto dealer conversion rate is ~50%," he said.
In addition to Model 3 initial reservation numbers, the firm sees a number or positive catalysts: continued evidence that Model X is ramping, a likely onslaught of positive Model X reviews, and their belief that Tesla will meet Q1 delivery guidance.
"We believe the near-term risk / reward remains positive" he said.
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Shares of Tesla Motors closed at $230.13 yesterday.