Baird reiterated its Outperform rating on Tesla Inc (NASDAQ:TSLA) Monday despite a report by the Wall Street Journal saying the US Federal Bureau of Investigations was reviewing the company's Model 3 production numbers as part of a criminal probe.
“Shares were briefly under pressure on Friday following a WSJ report Tesla is facing a criminal investigation regarding Model 3 production targets. The article largely recycled previously reported information, in our opinion, and we find certain aspects of the report to be somewhat suspect,” wrote Baird analysts Ben Kallo and David Katter in a note to clients.
“We think it will be extremely difficult for any investigation to find criminal wrongdoing, as evidenced by the recent dismissal of a shareholder lawsuit in the US District Court of Northern California. We would be buyers on any weakness,” they added.
In August, the US District Court of Northern California dismissed a shareholder lawsuit regarding Tesla’s forecasts. Judge Charles Breyer indicated Tesla made meaningful qualifications to projections, and wrote “securities laws do not punish companies for failing to achieve their targets.” Plaintiffs subsequently refiled the lawsuit.
The Baird analysts were of the view that investigators would need to find evidence Tesla made projections it knew would be impossible to achieve, which is “a high bar to meet.”
READ: FBI looking into Tesla’s Model 3 productions numbers, says WSJ
“Separately, the US Air Force’s ongoing dealings with SpaceX could imply any criminal probe facing Tesla CEO Elon Musk is not considered serious,” wrote the analysts.
“The Air Force continues to work with SpaceX, including a $130million contract announced earlier this summer. We view this positively, as Musk and the company presumably faced a substantial evaluation/investigation before receiving the military contract,” they added.
Tesla released a statement in response, confirming that it received a voluntary request for documents about its public guidance for the Model 3 and had cooperated.
The company said it has not received a subpoena, a request for testimony or additional documents, or any other formal process from the Department of Justice.
Shares of Tesla were unfazed, up more than 2.75% to $340 in Monday morning trade.
Contact Uttara Choudhury at [email protected]
Follow her on Twitter: @UttaraProactive
Bagikan Berita Ini
0 Response to "Baird reiterates Outperform rating on Tesla despite WSJ report on FBI probing Model 3 productions numbers"
Post a Comment