Rumor Suggests Some Tesla (TSLA) Model 3 Customers Could Camp Out Overnight

At least one Tesla (NASDAQ: TSLA) store expects customers to camp out overnight ahead of the opening of Model 3 reservations at stores tomorrow at 10 am ET, said Rod Lache of Deutsche Bank, an analyst with a Hold rating on the stock. In his view, Tesla's reveal tomorrow evening will be a positive for sentiment, and if rumors are correct about the level of enthusiasm, it would be "unprecedented."

The title of Lache's research note aptly reads "Telsa's iPhone Moment."

"While we admittedly have limited ability to forecast the initial response, pre-orders in the 100,000 unit range, from the U.S. alone, would not surprise us based on the enthusiastic commentary we’ve heard from numerous Tesla owners (many of the 110,000 owners are likely to buy), purchase intenders, and feedback from Tesla stores (Tesla has 88 U.S. stores, a number of which could easily exceed 1,000 orders; one expects customers to camp out overnight). Such a response would be unprecedented for a car that is still almost 2 years away," said Lache.

"Clearly, Tesla needs to still achieve a number of other hurdles, including achievement of adjusted FCF breakeven (Tesla is targeting this by year end, at 1600 1800 units per week), ramping Model X production, improving margins (Tesla targets Model S margins at 30% and Model X at 25% by year end), refreshing the Model S to avoid cannibalization from Model 3, and reducing costs to enable profitability on Model 3. Nonetheless, we continue to believe this week’s Model 3 reveal should be a positive for this sentiment driven stock," added the analyst.

Online reservations for Tesla's Model 3 start on April 1 following the Thursday's night reveal.

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