Adam Jonas, an analyst for Morgan Stanley, has lowered his bear case estimate for Tesla share prices from $97 to just $10. Jonas isn’t the only analyst lowering expectations for Tesla though. Now that prices have fallen 48% since shares hit $376.79 in December, Wall Street analysts have come to the conclusion that they can no longer risk their reputations on a bullish case for Tesla. Bloomberg’s Oliver Ssachgau and Tom Lavell report:
“Demand is at the heart of the problem,” analysts led by Adam Jonas said in a note. “Tesla has grown too big relative to near-term demand, putting great strain on the fundamentals.”
Jonas lowered his “bear case” for Tesla shares from a previous estimate of $97 to take into account the risk that the company misses its current sales forecast for China by about half. He maintained his $230 price target.
Tesla plunged as much as 4.5% to $196.04 at the open of regular trading Tuesday in New York. A selloff sparked by slowing deliveries and a chaotic shift in retailing strategy early this year has accelerated this month, with several analysts sounding alarms about petering demand.
After handing over just 63,000 cars in the first quarter, Tesla expects to deliver as many as 100,000 cars in the second and four times that for the year. Hitting the full-year target is going to be a “Herculean task,” Wedbush Securities analyst Dan Ives wrote in a report Sunday, calling the issues plaguing the company a “code red situation.”
Even Ben Kallo, a longtime Tesla bull at Robert W. Baird & Co. who maintains the equivalent of a buy rating on the stock, wrote Tuesday that it may take several weeks or months for the negative narrative surrounding the carmaker to shift. He cut his price target to $340 from $400, telling clients that “credibility questions, messaging/communication and significant noise around TSLA have kept incremental buyers out of the market.”
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Jeremy Jones, CFA
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