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Tesla falls on Model 3 production delay, but analysts upbeat

From Reuters - January 4, 2018

(Reuters) - Tesla Inc (TSLA.O) shares fell 3.5 percent in premarket trading on Thursday, setting the company up to lose nearly $1.9 billion in market value after it pushed back a production target for its much-anticipated Model 3 sedan yet again.

Analysts, however, stayed upbeat, saying the electric car maker had finally set an achievable target for their mass-market sedan that is priced at $35,000.

Tesla said on Wednesday it would likely build about 2,500 Model 3s per week by the end of the first quarter, half the number it had earlier promised. The company now expects to reach its goal of 5,000 vehicles per week by the end of the second quarter.

We believe that Tesla may have finally set a beatable production target, Nomura Instinet analyst Romit Shah wrote in a note to clients.

Importantly, we believe that Tesla is prioritizing quality control. While Teslas repeated guidance revisions could begin to risk damaging its elite brand, a mass-recall would probably be far more damaging, he said.

Tesla shares fell to $306.06 in premarket trading on Thursday. The median price target on the stock is $310 and eight of 25 brokerages covering the stock rate it buy or higher. Eight have a hold rating and the rest a sell or lower.

The company, headed by Elon Musk, has been struggling to overcome production bottlenecks and reported its biggest-ever quarterly loss in the third quarter.

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