Some on Wall Street were sounding skeptical about the new Tesla Inc. pickup truck, with the company’s shares falling ahead of this week’s unveiling, Tesla’s first foray into the top car segment in the U.S.
Tesla TSLA, -0.56% stock fell more than 1% on Monday, after a weekly gain of more than 4% for the previous week. Chief Executive Elon Musk tweeted earlier this month that the pickup truck, which he has called the “cybertruck,” will be unveiled on Thursday in the Los Angeles area.
Musk has called the truck a “‘Blade Runner’ pickup truck,” “out of a sci-fi movie” and unrecognizable from the pickups that have been sold in the past decades.
Roughly one in five vehicles sold in the U.S. January through October was a pickup truck, up from 17% of the vehicles sold in all of 2018, according to Edmunds. Ford Motor Co.’s F-150, launched in 1948, has been the best-selling vehicle in the U.S. for more than a decade, with no indication it will be dethroned soon.
Wall Street was choosing to focus on the here and now, though.
“We expect focus to be on how well the actual design resonates with pickup buyers,” Emmanuel Rosner at Deutsche Bank said in a note Monday.
“Based on previous comments, starting price could be <$50k, high-end versions could feature 400-500 miles of range and 0-60mph acceleration <3.4 seconds, but very little has been disclosed about the actual design of the truck.”
There’s a risk the vehicle would be so futuristic as to not attract “traditional pickup buyers, leaving it a lower-volume niche product,” Rosner said.
It could be a case of “once burned”: Back in March, Tesla had the compact SUV Model Y reveal just ahead of its first-quarter results. Many analysts faulted Tesla for that timing, and the reveal renewed concerns about production issues. The stock fell 5% after the Model Y unveiling.
“After the model Model Y launch fizzled on concerns this will cannibalize the Model 3, we expect a similar response to the truck,” said Craig Irwin, an analyst with Roth Capital Partners.
“We do not expect initial truck production until mid-2021, around a year after fist Model Y production,” Irwin said in a note. Tesla could also walk back from prior suggestions that the “Cybertruck” would start at less than $50,000 and with the 400, 500-mile range, he said.
Roth reiterated its sell rating on the stock with a price target of $249. Deutsche Bank also kept its hold rating on Tesla shares with a price target of $290.
On average, Tesla stock is rated a hold with a price target of $314.83, according to FactSet, which tracks 32 Wall Street analysts on Tesla. The average price target would represent a 9% discount over Monday’s prices.