Market Overview

Will Tesla's Model 3 Offer A Positive Surprise For Shareholders?

Will Tesla's Model 3 Offer A Positive Surprise For Shareholders?

Credit Suisse’s Dan Galves does not expect “much incremental information” during Tesla Motors Inc (NASDAQ: TSLA Model 3 unveiling on Thursday.

“However, the real catalyst from the Model 3 unveil will be the first indication of demand for the car, in terms of initial reservations…and we think this will be a positive surprise,” Galves mentioned.

This, in combination with other potential for positive catalysts, such as continued evidence of the ramping of Model X, positive reviews of Model X and Tesla Motors meeting the Q1 delivery guidance, makes the near term risk/reward on the stock positive.

Related Link: What Secrets Are Behind Tesla's Model 3? Bloomberg Takes Some Guesses

Vehicle Reservation

Reservations can be made in person until 8:30 p.m. from March 31 onwards at a Tesla store. After 8:30 p.m., reservations can be made online.

Galves expects more than 100,000 reservations to be made in the first several weeks, through two key population pools, “1) The ~107k current Model S / X owners. Very few owners we've spoken to will NOT place a Model 3 reservation. 2) Those who have test-driven Model S, but can't afford it.”

The analyst believes that only about 15 percent of the people who test drive the Model S would actually buy the vehicle.

“We believe the reason Tesla conversion is lower is that there is so much interest from those who can't afford the current offerings,” Galves added.

Galves maintained an Outperform rating and $240 price target.

Latest Ratings for TSLA

Jan 2020DowngradesEqual-WeightUnderweight
Jan 2020MaintainsBuy
Jan 2020MaintainsOutperform

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