Elon Musk plans to announce some Tesla news on Thursday — here’s what Wall Street is expecting (TSLA)

February 28, 2019

Tesla is set to announce news today at 5 pm Pacific, CEO Elon Musk announced this week.
The timing is interesting, given the billionaire's renewed spat with federal regulators.
Wall Street is speculating that the news could be a long-awaited base-model Model 3 or an autonomous update.

Elon Musk announced this week that "some Tesla news" will come at 2 pm on Thursday at 2 pm PT this week.

Due to its timing — right in the middle of a renewed fight with federal regulators and amid a flurry of Twitter memes — the cryptic hint has fueled a flurry of speculation.

Ahead of the announcement, Ben Kallo, an analyst at Baird, declared Tesla a "fresh pick" and re-affirmed his $465 price target — one of the highest on Wall Street. Regardless of what the news ends up being, he says it should help the stock pick up steam.

"Regardless of the content of the company update, we think the demand concerns are overblown and believe the announcement could be a catalyst," Kallo told clients in a note Thursday morning.

"Investor skepticism on demand (both in the first quarter and over the course of 2019) has been high in our recent conversations, and we expect this update could highlight positive business developments and improve broader sentiment."

Among the possibilities for today's announcement are the long-awaited $35,000 version of the Model 3, an update on autonomous driving (Musk’s previous self-driving comment comments have been deemed dangerous by experts), or even the Model Y.

Kallo, however, is hoping that it’s not the Model Y.

"We believe management is cognizant of the short-term need to reassure investors on Model 3 demand and margins," he said.

Adding another product to the mix could complicate Tesla’s on-going headaches surrounding production ramp and delivery logistics.

It's not a bid to boost Tesla's stock price ahead of the $920 million bond conversion. The notes' observation period has ended with shares below the convert price of $359.88, and Bloomberg reported that the company will repay debt holders with a mix of cash and equity.

Debt payments aside, Kallo says investors should focus on long-term fundamentals to avoid the "constant noise" around Tesla.

"The SEC recently requested a federal judge hold Musk in civil contempt which added to significant noise (employee turnover, SEC headlines, etc.) in recent weeks," Kallo said.

"We think share weakness has created a buying opportunity for investors willing to focus on improving company fundamentals."

Shares of Tesla sank about 0.6% in trading Thursday, near $313. The stock is about 23% off its 52-week high of $387 per share, hit last August amid Musk's failed attempt to take the company private, which began the ongoing regulatory drama.