Tesla Inc. (TSLA) – Get Report shares powered higher Thursday following reports that the clean energy carmaker had cut prices for its Model 3 sedan in China and could be ready to publish record third quarter deliveries later this week.
Tesla’s China website suggests that starting prices for its popular Model 3, which are now made in its Shanghai factory, have been reduced by 8% to around $36,800 each, while the longer-range version was reduced to around $40,000 each. The new models will also included cheaper lithium iron phosphate batteries, Reuters reported.
Tesla shares were marked 3% higher in pre-market trading Thursday to indicate an opening bell price of $442.20 each, a move that would trim losses since the stock’s five-for-1 split on August 31 to around 11.2%.
A report from the tech-focused ‘electrek’ news website yesterday also suggested Tesla’s third quarter deliveries could come in at a record high later this week, thanks in part to solid China sales which topped the 11,000 mark last month in the world’s biggest car market.
Street forecasts suggest Tesla’s third quarter deliveries will rise to around 140,000 vehicles, compared to a 90,650 tally for the three months ending in June. That would still leave Tesla needing to shift 166,000 cars — another record — over the final three months of the year to meet its 2020 estimate of 500,000.
JMP Securities analysts Joseph Osha, however, thinks that while Tesla could ‘plausibly’ reach the Street’s consensus of 136,000 deliveries in Q3, he sees “more downside than upside” to the tally, thanks in large part to weakness in Europe and flat growth in the United States.
“None of this is to suggest that TSLA’s competitive success is slowing more fundamentally,” Osha said in a client note Thursday. “We note that our unit estimate for next year is still above the Street, albeit not as much as it was, and we continue to believe the company can get to a 2.5 million unit run rate by 2025, which is also above consensus.”
“That outcome, combined with a 20% EBITDA expectation and discounted back to the present at 10%, continues to suggest the stock is fairly valued,” he added.