The Tesla Model S is no doubt a landmark product for the Palo Alto, California manufacturer. Having enjoyed raves from critics and consumers, we reported last month that the whole lot of Tesla Model S 'Signature' models have sold out.
However, Wunderlich Securities Inc. analyst Theodore O'Neill discovered a piece of data that spooked him, downgrading his TSLA rating from 'buy' to a 'sell'.
According to a report written by O'Neill, Tesla will reduce its third-quarter Model S production output from 1,000 units to only 500. Reacting to his intel, O'Neill lowered his 18-month projection from a target price of $49 per share to just $28.
O'Neill wrote, "Tesla wants to be sure the cars are right and apparently they are not in a position to ramp up to get to 1,000 units this quarter. While the company is sticking to its 5,000 unit forecast for 2012, how it gets there becomes a second issue for it to resolve."
However, Tesla denies O'Neill's report and responded that the company has no plans to alter its production schedule. Company spokeswoman Shanna Hendriks confirmed with Bloomberg, "There's been no change to our production."
TSLA shares slid to $32.15 at close, a major 7.3 percent decline from yesterday. It is Tesla's most significant decline since April 4.