The production goal of Tesla, which is expected to last all night, fails to convince Wall Street

(Reuters) – Tesla Inc. ( TSLA.O ) burning midnight oil to reach a long-standing target of making 5000 model 3 vehicles a week did not managed to convince Wall Street that the electric carmaker could support this production pace, sending shares down 2.3 percent Monday.

Tesla hit the target by running around the clock and pulling the workers off other projects, the workers said. The company also made the unprecedented decision to set up a new tent production line on the campus of its Fremont plant, details of which CEO Elon Musk tweeted last month.

Tesla's sharply outskilled shares rose 6.4% to $ 364.78 early in the session but fell after several analysts wondered whether Tesla would be able to maintain model 3's production momentum , crucial for long-term financial health. l & # 39; company.

"In the meantime, we do not consider this production rate to be operationally or financially viable," said CFRA analyst Efraim Levy. "However, over time, we expect the manufacturing rate to become sustainable and even increase."

Levy reduced CFRA's rating on Tesla shares for the "sell" of "hold."

Tesla, of which Elon Musk Dimanche as having become a "real car company", she now plans to increase production to 6,000 models 3 per week by the end of August, signaling confidence in solving technical problems and assembly that tormented the company for months.

Tesla also reaffirmed a positive cash flow and profit forecast for the year and announced that Doug Field, executive vice president of engineering, was retiring after five years with the company. ;business.

Tesla burned money to produce model 3. Problems related to automation, battery problems and other bottlenecks potentially compromised the position Tesla on the electric car market.

While UBS analyst Colin Langan said the company had achieved an exemplary production level of 3, he noted that second-quarter vehicle shipments missed 51,000 and the consensus estimate of 49,000.

It also asked if the company could maintain faster production and its profit prospects.

"We are very concerned about the quality and if you read the reports online, there are significant quality issues, they have not yet proven that they can produce these benefits. Mathematics is very hard to get a sustainable profit, "said Langan.

Model 3 production tripled to 28,578 in the company's second quarter from the previous quarter, Tesla said. 19659002] The company stated that 11,166 model 3 vehicles were in transit to customers at the end of the second quarter and that they would be delivered early next quarter.

Bookings at the end of the second quarter were approximately 420,000.Tesla has delivered 28,386 model 3 cars to date, with Model 3 reservations totaling 450,000 by the end of the first quarter. 19659002] The company declared that she expected orders to grow faster than the production rate, once she began to allow potential customers to see and test the Model 3 in local stores .

Although initially touting the Model 3 as a $ 35,000 vehicle, Tesla has not yet started building this basic version and is currently building a more expensive model while it's trying to get out of "the hell of production."

Tesla's three convertible bonds have been little affected by reaching the production target, suggesting that stock price volatility has discouraged bondholders from converting their stocks into stocks despite the good news of production. At Friday's close, 34.83 million shares of Tesla stock or 27.5% of shares available for sale were sold short and investors did not appear to be hedging their positions before the announcement of Monday, according to Ihor Dusaniwsky, managing director of S3 Partners. analysis firm.

"You wonder if traders are on the verge of risk on Tesla." At one point, you're gorged, you can not take another bite, "he said.

Tesla's historic achievement has not altered the recommendation of David Kudla, founder and CEO of Mainstay Capital Management in Grand Blanc, Michigan, to sell short shares to Tesla. Selling stock short is a bet that the price will go down.

"The pressure to achieve these self-imposed goals makes one wonder what cost was incurred to build these cars and how quality was affected," said Kudla, who is personally short of Tesla stock.

"Anyone short of $ 361 or $ 300, everything will be fine."