Model 3 Frustrations Lead Some Tesla Inc (TSLA) Buyers to Back Out

Tesla Inc’s (NASDAQ:TSLA) production worries are not just a concern for the company and its shareholders. There’s also the little matter of those that have plunked down deposits on the Model 3, and some are questioning their decisions.

Marketwatch passes along the take of Vitaliy Katsenelson, CIO at Investment Management Associates, who is reconsidering his choice to purchase a Tesla.

I share this experience because I’m probably not the only one thinking this way. As the dollar meets the road and a lot of Model 3 depositors visit Tesla showrooms, they will likely have similar second thoughts. Consequently, Tesla may discover that lower Model 3 production levels will be sufficient to meet declining demand after a raft of deposit cancellations.
I am not short-selling Tesla stock, and outside of my $1,000 unsecured loan (my deposit) neither my firm or I have a position in Tesla. But it is becoming difficult to see how the Model 3 will be the car that leads Tesla to profitability. As for my deposit, I’ll be getting it back before it’s too late.

Concerns over the production delays are leading to worries that there will be even more bugs and whatnot for early Model 3 customers to deal with. When you add in the fact that we’re not exactly talking about the most budget-friendly vehicle on the market, it’s easy to see why some depositors are suddenly feeling hesitant as negative Tesla headlines continue to swirl around.

It looks like we can count Katsenelson in the camp of those that are thinking twice, and he may get even more company if Tesla’s Model 3 production struggles continue.

Tesla Inc shares rose $1.84 (+0.61%) in premarket trading Monday. Year-to-date, TSLA has declined -3.32%, versus a -1.64% rise in the benchmark S&P 500 index during the same period.

TSLA currently has a StockNews.com POWR Rating of D (Sell), and is ranked #14 of 24 stocks in the Auto & Vehicle Manufacturers category.