Tesla's ‘Amateur Hour’ Backpedaling Prompts Analyst Head-Shaking

(Bloomberg) -- Tesla Inc.’s abrupt about-turn in the decision to shutter stores and slash prices raise questions about management decisions at the electric-vehicle maker, analysts covering the stock said.

In a blog post published on Sunday, Tesla said it would now keep significantly more stores open than previously announced and, as a result, raise the price of its cars by about 3 percent worldwide. The original plan of winding down most stores came Feb. 28 and was described as a cost-cutting move by Chief Executive Officer Elon Musk.

Tesla shares gained as much as 1.4 percent in New York.

Here’s what analysts are saying about the latest company move.

RBC, Joseph Spak

“To backtrack from the online only strategy to us is a sign that may indicate Tesla did not see a positive reaction to orders post the announcement.”

“Going forward, Tesla does have another (short-term) marketing tool to close the quarter: order now before the March 18th price increases.”

“We have to wonder how engaged and motivated Tesla retail employees will be in the short run after being blind-sighted by the move and even now still potentially being held in limbo.”

“The seemingly spontaneous yet dramatically altering strategic decisions (for a $50 billion market cap company) doesn’t lend a lot of confidence, in our view. Rather, it makes it seem like Tesla is making decisions on the fly and reacting to very short-term factors.”

Rates underperform, price target $245.

Evercore ISI, Arndt Ellinghorst

“We do not think we will raise too many eyebrows with the opinion that this looks like amateur hour. Tesla clearly is in need of a stronger middle management layer critical in running a $50 billion auto company.”

“There should be no argument that this was a better topic for internal-discussion before what clearly has been and will be two months of pure price confusion for the consumer.”

Rates in-line, price target $330.

Canaccord Genuity, Jed Dorsheimer

“While the reversal to keep stores open does call into question the soundness of the initial decision, we view this as the right course of action and think that test drives are still an important part of the sales process until the electric vehicle penetration rates increase meaningfully.”

Rates buy, price target $450.

To contact the reporter on this story: Esha Dey in New York at edey@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Will Daley

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