Tesla shareholder meeting is a ‘fork in the road’ for the car maker

Tesla Inc.’s annual shareholder meeting next week presents a “fork in the road” for the Silicon Valley electric-car maker, beset by concerns about demand for its vehicles and the health of its balance sheet.

Tesla’s meeting is scheduled for Tuesday at 2:30 p.m. Pacific. It will be webcast.

After hitting multi-year lows in recent sessions, Tesla TSLA, -0.58% shares recouped some of their losses this week, looking poised to end the five-day period with a gain of more than 11%. The stock is up for four straight sessions, gaining more than 15% in that period and holding above $200 for the past two sessions.

The shareholder meeting’s formal agenda is likely “uneventful,” analysts at Wedbush said in a note Friday. Comments from Musk on the state of the business will likely be the noteworthy part, said the analysts, led by Dan Ives.

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“We continue to believe that Musk and Tesla are facing a ‘fork in the road scenario’ with Model 3 demand needing to rebound significantly into the next few quarters for the company to deliver sustained profitability, which remains a hot button issue of the Street,” particularly after the first-quarter delivery miss and the recent capital raise, the analysts said.

For the second quarter, Tesla needs a “very strong June” to reach Wall Street expectations for its quarterly delivery, the Wedbush analysts said.

Analysts polled by FactSet expect second-quarter deliveries, Tesla’s proxy for sales, of 92,000 vehicles, including 74,000 Model 3 sedans. That remains a “challenging threshold to hit,” but achievable depending on European deliveries, the analysts said.

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The bigger question remains the company’s guidance for deliveries between 360,00 and 400,000 vehicles for the year, which the analysts called “an uphill battle” unless Model 3 demand spikes in the second half of the year.

Hitting that guidance “is going to be a Herculean task as in a best-case scenario we see 360k-370k at this point and in a base case 340k-355k the likely path,” the Wedbush analysts said.

See also: Elon Musk’s latest leaked email: Tesla must catch up on deliveries

“After what has been a brutal six months for Tesla and its shareholders, we expect Tuesday to be a positive event as Musk and the Tesla team showcase the strides they have made so far on production and new Model designs,” they said.

Tesla shares have lost 38% this year, versus gains of 15% for the S&P 500 index SPX, +1.11% and 12% for the Dow Jones Industrial Average. DJIA, +1.09% 

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