Published on June 21st, 2019 | by Zachary Shahan0
Historical Tesla [TSLA] Forecasts From Goldman Sachs, David Tamberrino
June 21st, 2019 by Zachary Shahan
Goldman Sachs analyst David Tamberrino came out with a bearish downgrade for Tesla [TSLA] this week (full disclosure: I’m long TSLA). Those who closely follow Tesla stock and analyst statements weren’t that surprised. Tamberrino has a long history of recommending that investors/traders sell TSLA, as one Tesla Motors Club forum member made clear with this chart:
Chart screenshot from TipRanks
The forum member added this superb analysis of the analysis: “And certainly a monkey throwing darts (and I should know) would be a far more lucrative investment adviser.”
I don’t actually follow stock news and analyst forecasts that closely, but I’ve been finding the matter more and more interesting, so I decided to look into Tamberrino’s history in a bit more detail.
Searching “tamberrino tesla” for the second half of 2017, I found these four results at the top of Google (in order of their ranking in Google):
Oct 3., 2017: “Tesla shares to plunge nearly 40% due to weak Model 3 production, Goldman predicts” (CNBC). Key points in the article:
- “Goldman analyst David Tamberrino reaffirms his sell rating for Tesla shares, predicting Model 3 production will be slower than expected.”
- “In the third quarter, Tesla delivered 26,150 total vehicles and 220 Model 3 cars versus the FactSet estimates of 25,860 and 1,260 respectively.”
And a top quote on the company’s target share price: “The analyst increased his six-month price target for Telsa [sic] to $210 from $200, a 39 percent downside from Monday’s close.” (Tesla’s share price stayed well above $300 in the following 6 months except for a brief period at the end of March where they shot far below $300 and then quickly shot right back up.)
July 5, 2017: “Goldman predicts Tesla shares will get cut in half on ‘plateauing’ Model S sales” (CNBC). Key points in the article:
- “Goldman lowers its six-month price target for Tesla to $180 from $190, representing 49 percent downside from Monday’s close.”
- “The firm reiterates its sell rating for Tesla shares, saying the company will likely have issues meeting its car production targets this year.”
Tesla’s share price stayed well above $300 in the 6 months following that downgrade.
July 6, 2017: “Tesla Loses ‘Most Valuable U.S. Carmaker’ Crown As Stock Takes $12 Billion Hit” (Forbes). Yes, basically, the Goldman Sachs downgrade was a temporary self-fulfilling prophecy. “Shares of the Palo Alto, California-based company dropped 5.6 percent on Thursday, shrinking Tesla’s market capitalization to $50.7 billion, down from $62.99 billion less than two weeks earlier. That put Tesla behind General Motors, which had a $52.65 billion valuation on Thursday, though still ahead of Ford at $44.64 billion.” After discussing Model 3 production forecasts and Model S & Model X demand briefly, the article noted, “Goldman Sachs analyst David Tamberrino saw something troubling in Tesla’s July 3 sales and production release: A looming slowdown in growth for Tesla’s two highest-margin vehicles.”
Not related to Tamberrino, I found a couple of other interesting lines from that article:
- “The threat of new competition in the electric vehicle space is also building up. Volkswagen, Audi, BMW, General Motors, Nissan, Honda and other companies for the past year or so have announced plans to add new and better EVs to their portfolios. But on July 5 Volvo went even further, saying that it would transition to an all-electric lineup starting in 2019. At that point, it will no longer sell vehicles with merely gasoline or diesel engines. Instead, it will offer hybrid, plug-in hybrid and full EV models across its product line.” (The age-old “the competition is coming” argument. Still a popular card in the Tesla-critic hand.)
- “In China, Tesla has yet to find a local joint-venture partner to produce its vehicles. That’s kept it a minor player so far in the biggest and fastest-growing market for electric vehicles, Johnson said. What’s more, battery prices in China may be falling to a level that puts them below what Musk is aiming for when his massive $5 billion Gigafactory moves to full production in the next year or so. ‘A flood of cheap Chinese batteries will negate Tesla Gigafactory scale advantages,’ [Barclays analyst Brian] Johnson said.” (Well, those concerns don’t seem to have aged well.)
July 5, 2017: “Tesla drops 7% after Goldman Sachs says the stock is worth $180” (Tech Crunch). More of the same in that article, so I won’t repeat it.
I then jumped to the next 6-month period, January 1–June 30, 2018.
June 26, 2018: “Goldman reiterates sell on Tesla and expects Model 3 deliveries to miss estimates” (CNBC). Yep, Goldman Sachs again was recommending that investors/traders sell TSLA. Key points:
- “Goldman Sachs says Model 3 deliveries may come in under consensus.” (This was concerning Q2 deliveries, and their forecast wasn’t half shabby.)
- “Analyst David Tamberrino also questions whether Tesla can sustain a Model 3 production rate of 5,000 cars per week.” (That concern, however, wasn’t worth publicizing.)
As we now know, Tesla’s Q3 and Q4 2018 quarterly deliveries were gigantic.
Did David Tamberrino and Goldman Sachs get some things right? Yep — they predicted early on that the Tesla Model 3 production ramp would be harder and slower than Tesla expected. Tamberrino and Sachs were also on the better side of analyst forecasts for Q2 2018 deliveries. However, overall, Tamberrino’s/Sachs’ stock predictions and long-term concerns don’t look too rosy in retrospect, and it’s hard to see someone making money trading TSLA by following their advice. [Note: this is not investment advice, and I certainly wouldn’t put my neck out there recommending when traders should buy or sell TSLA!]
March 19, 2018: “Goldman: Tesla shares to drop more than 30 percent in the next 6 months on weak Model 3 deliveries” (CNBC). Earlier in 2018, Sachs was also bearish on Tesla. Key points:
- “Goldman analyst David Tamberrino reaffirms his sell rating for Tesla shares, predicting Model 3 deliveries will come in below expectations.”
- “‘We continue to expect a slow ramp for the Model 3,’ he writes.”
- “The analyst reiterated his $205 six-month price target for Telsa [sic] shares, representing 36 percent downside to Friday’s close.” (TSLA mostly stayed above $300 in that time period. It did drop to the $260s for a period of time, but it never got close to $205, even in the worst part of the potential “take Tesla private” controversy.)
Again, to be fair to Tamberrino, his Q1 Model 3 delivery forecast was better than Wall Street’s “consensus” — “Tamberrino reaffirmed his first-quarter Model 3 delivery estimate of 7,000 versus the Wall Street average of 13,800 after his analysis of vehicle registration data.”
June 27, 2018: “Tesla flyover captures Model 3 rolling off Fremont’s giant tent assembly line” (Teslarati). As you can see from the headline, this article was mostly about other matters, but there was this relevant paragraph:
“As the end of June approaches, Tesla stock (NASDAQ:TSLA) has become a battleground between bulls and short-sellers, with Goldman Sachs analyst David Tamberrino stating that Tesla would likely only deliver 22,000 units of the Model 3 during the second quarter, despite production likely to hit 5,000 vehicles per week in the final week of Q2 2018. It should be noted, however, that earlier this year, Tamberrino also issued a report stating that Tesla would only manufacture 1,500 Model 3 per week for the second quarter, making his current bearish expectations slightly optimistic by his own standards.”
June 26, 2018: “Tesla Model 3 Deliveries May Disappoint Again, Goldman Says” (Bloomberg).
May 18, 2018: “Analyst Predicts Tesla Stock Will Fall Under $200” (U.S. News). Subtitle: “Goldman Sachs says Tesla will need a major cash infusion.” From the opening paragraph: “Even after TSLA stock has plummeted 15 percent in the past three months, Goldman says it sees 30 percent more downside ahead and predicts Tesla may need to raise as much as $10.5 billion over the next two years.” At that time, Goldman Sachs had a “sell” rating and a $195 price target. To reiterate, TSLA didn’t get close to $195 in the following 6 months, mostly staying above $300, or even above $350 toward the end of that 6 month period, and at the worst time dropping down to just below $260 a share.
Note that Tamberrino is one of the analysts who kept assuming Tesla had to raise more money in 2018 despite Elon Musk continually saying the company didn’t. In the end, Musk was clearly right, as Tesla didn’t have to raise money and actually made a profit in both Q3 and Q4 2018.
Take it for what it’s worth, but it seems to me that Tamberrino’s/Sachs’ TSLA downgrade this week doesn’t really mean anything. Again, simply look at the chart above and consider how you would felt if you had sold TSLA at each of those times Tamberrino recommended doing so.
There’s more Tamberrino/Sachs history to explore with regard to TSLA, but that covered the period from nearly 2 years ago (July 1, 2017) to one year ago (up to June 30, 2018). I’ll probably come back to this topic again soon in order to examine Tamberrino’s TSLA coverage this past year, but it’s just after 3:30am here, so I think I should call it a night.
Let us know if you think there’s anything else from the archives above worth highlighting or discussing.
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