Market Overview

Will Tesla Get More Specific About The Model X's Release Date?

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Tesla Motors Inc (NASDAQ: TSLA) is only hours away from releasing its fourth quarter results. In addition to the actual earnings numbers, Cathie Wood, founder and CIO of ARK Investment Management, expects investors to look for an update regarding the Model X's launch date.

"How delayed is it until the fourth quarter?" she said. "Could it be delayed until 2016?"

Wood told Benzinga that ARK is very long-term in its perspective. She said the company has been doing a lot of work on the 500,000 unit number that Tesla CEO Elon Musk has touted, which he hopes to achieve by 2020.

"We think they could do that easily," said Wood.

"We've looked at their positioning in the electric vehicle market now relative to other players. Between the Model X (when they do release it) and finally the Model 3, we think they could actually hit anywhere from 750,000 to one million if they're able to produce that much in the early 2020s."

Wood also believes that investors may be underestimating Tesla's potential. "They think of it as being sort of a bubble stock," she explained.

"We do not think it's a bubble stock."

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Model X Delay: Will It Hurt?

Wood doesn't expect a Model X delay to hinder Tesla's ability to get to 500,000 units by 2020, "which a lot of people out there already have a lot of doubts about."

"We tend to use opportunities like a short-term timing issue…to build our positions," she said. "We'd have to see what they say about other things going on at the same time, but it's usually a good opportunity to take advantage of overreactions."

Model 3 Pricing

Many have debated the Model 3's proposed price of $35,000 to $40,000. Some think it is too expensive to be considered a mainstream vehicle; others argue that it will still be cheaper than a Corolla with all the bells and whistles added in.

"We think they are actually expanding the market," said Wood. "The early indications are [that] the people who are interested in the Model 3 are those who have come in to try out the Model S and can't afford a Model S."

Those customers still want to drive a Tesla automobile, however, and have asked the company to keep them informed about the Model 3's release.

"If they've come in to check out an $80,000 car just to get a taste, and they can't afford that, they're probably in a much better position to afford a $40,000 car," Wood added. "So we think Tesla is going to expand the market with this car -- expand what people call the mainstream market with this car."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Latest Ratings for TSLA

DateFirmActionFromTo
Mar 2020Piper SandlerMaintainsOverweight
Mar 2020Morgan StanleyMaintainsEqual-Weight
Mar 2020Argus ResearchDowngradesBuyHold

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