Tesla Motors Inc (NASDAQ:TSLA) has a fan in Barclays analyst Brian A. Johnson, but it’s not an undying willingness to support the company. In a report released on Tuesday Johnson raised questions about the company’s future and rated the firm at Equal Weight. The report also included a price target of $190, unchanged from previous Barclays research on Tesla Motors.
The big issues, according to Johnson, are yet to come and they’re not being properly priced into the company’s shares. The Barclay’s analyst specifies that “risks in becoming a mass-market OEM are not properly recognized.”
Big risks not recognized at Tesla Motors
Some of those risks are likely in execution. According to JPMorgan analyst Ryan Brinkman, Tesla Motors Inc (NASDAQ:TSLA) won’t be able to deliver more than 50 units of its Model X SUV before the end of the third quarter of 2015. What he highlights, in a report that remains positive overall, is that Elon Musk and his crew are regularly unable to fulfill promises, and that can hamper a company in the long term.
The risks involved in becoming a mass-market car maker are a little more extreme than simply releasing an SUV a few months late, bugs that lead to recalls are the big risk for Tesla Motors. One big issue with the Model X could kill the company for good. It’s those kinds of risks that Barclays reckons the market isn’t pricing into Tesla.
Good news is on the way
Apart from the first quarter earnings, which Barclays reckons could lead to a storm of negative trading around Tesla Motors, the news that’s on the way for the foreseeable future is likely good. The company’s next product launch is at the end of April, and that should add momentum to the stock according to the investment bank.
What kind of momentum that is really depends on the spin the earnings report puts on the company’s future. If the firm burned cash prodigiously in the first three months of the year, and needs to go to the capital markets to get the release of the Model X right, trouble can be expected.
Looking for maturity at Tesla Motors
The whole point of the Barclay’s analysis, and the analysis of many other conservative Tesla Motors followers, is that Tesla Motors is immature, and there are no signs of maturity on the horizon just yet. Elon Musk says the firm won’t become profitable until 2020. Until it manages to create some kind of financial security for itself, Tesla is a very risky proposition for investors.
Realizing that risk, not just mentally, but also in the price of the stock, is something that hasn’t happened quite yet, and its price is running well ahead of the Barclay’s target as a result.