(Reuters) - Shares in Tesla (NASDAQ:TSLA) Inc fell nearly 4 percent on Thursday as Wall Street analysts following up on its fourth-quarter results questioned underlying demand for its crucial Model 3 sedan and the electric car maker's ability to make inroads in China.
Tesla reported quarterly profit below analysts' expectations on Wednesday and surprised investors by announcing that Chief Financial Officer Deepak Ahuja, 56, would leave and handover the reins to 34-year-old Zach Kirkhorn, its vice president of finance.
JPMorgan (NYSE:JPM) analysts were among those warning that Ahuja's leaving deprived the company of long automotive industry experience and relative stability in a company which has seen a steady stream of senior staff come and go since 2016.
Analysts were also concerned by Tesla's indication that it is only making cars for China and Europe right now, and expects a gap of about 10,000 vehicles between production and deliveries due to vehicles in transit at the end of the first quarter.
"This is a strong indication that demand in the U.S. for both the mid-range and long-range Model 3 versions has largely been exhausted, and the company is still working through the estimated ~6.8k of unsold Model 3 inventory," Cowen analysts said.
Still, the fall in Tesla shares was less than that suggested by initial pricing after Wednesday's results and also far smaller than some of the swings in one of the past year's most volatile Wall Street stocks.
The company, which is striving to stabilize production and deliver consistent profit, ended the quarter with $4.3 billion in cash and said it had "sufficient cash on hand" to pay a $920 million convertible bond maturing in March.
Of the 31 brokerages covering Tesla, 10 have a "buy" or higher rating, 10 "hold" and 11 have a "sell" or lower rating and their median price target is 327.50.
Only four changed their price targets on the stock on Thursday, with two raises and two cuts. Wedbush cut its price target by $50 to $390.
While Tesla is pumping money into a Shanghai factory, which it hopes to bring on line around the end of this year with a target of producing 500,000 vehicles a year, several analysts questioned whether that investment will pay off.
"Tesla serves the purpose of a 'stalking horse' to the fast growing domestic Chinese EV industry, but we believe it has limited to zero terminal value in a region where a number of domestic champions should emerge," Morgan Stanley (NYSE:MS) analysts said.