Elon Musk, CEO of Tesla Motors Inc (NASDAQ: TSLA) isn’t a big fan of delivering bad news about his company. The executive leader does his best to turn any news into good news and to excite investors about the future prospects of the electric carmaker. In a new interview, however, Mr. Musk admits that his projections for 2015 Model S sales may have been optimistic.
After revealing first quarter sales of 10,030, slightly more than expected, Elon Musk said that he was confident that the company would meet its sales target for the year, which had been set at 55,000. With slowing sales in China and cheap gasoline killing the Tesla Motors value proposition, that looks less and less likely.
Tesla Motors bows to reality
Elon Musk isn’t the first to notice that 55,000 may be out of the company’s reach. Since the beginning of the year many analysts have speculated that slowing sales would result in failure to meet the target. The most prominent Tesla Motors detractor on Wall Street, Bank of America’s John Lovall II, said that 55,000 was in doubt back at the beginning of April.
In an interview with Japanese business news outlet Nikkei earlier this week Mr. Musk said that he expects 2015 sales to come in a little bit above 50,000. That signals an expectation of weaker sales. The executive may have more to say about the matter in the course of the company’s earnings conference call.
Mr. Musk and his team will present Tesla Motors first quarter earnings to the public on Wednesday, May 6. A conference call at 5 PM Eastern Time that afternoon will likely see questions about the company’s projections for the full year be asked.
Elon Musk humbled
It is possible, however, that Mr. Musk was simply being humble in conversation with the Nikkei, but, if so, it was likely a misstep. Low expectations aren’t wanted from an executive unless you’re Apple and able to breeze past them every single time.
Fortunately for the CEO, and for his shareholders, analysts have taken a light stance on the vehicle sales targets for the Model S. Adam Jonas, an analyst with Morgan Stanley, is a good example. He reckons that the company will sell around 51,000 Model S sedans in 2015, but he’s still comfortable putting a price target of $280 on the company’s shares.
Mr. Jonas thinks the company lost around 48 cents per share in the first quarter of the year.
Analysts are simply not all that strict with Tesla Motors short term targets, they’re more interested in the long term prospects of the company. As earnings estimates for that short term continue to be reigned in and Mr. Musk reveals a lack of global demand, the short term will eventually impact long term prospects, unless things turn around.