Tesla tanks as analyst warns of a code-red situation

Tesla tanks as analyst warns of a code-red situation

Tesla shares neared their lowest price since December 2016 on concerns the carmaker faces a “Kilimanjaro-like uphill climb” to hit profitability goals in the second half of the year.

TESLA, INC.

200.33

-10.70

-5.07%

In a note Sunday, Wedbush analyst Dan Ives described the electric-car maker’s predicament as a “code-red situation” and cut his price target on the stock to $230 from $275. Ives slashed his target from $365 just last month. He was once among the most bullish analysts covering Tesla.

Ives said in his note he has “major concerns around the trajectory of Tesla’s growth prospects and underlying demand on Model 3 in the U.S. over the coming quarters.”

Tesla shares fell nearly 6% in early trading Monday, poised to reach their lowest since December 2016, amid broader pressure as trade fears continued to weigh on global equities markets. The stock closed at the lowest level in almost 2 1/2 years on Friday after Musk called for a “hardcore” review of all the company’s expenses and an analyst warned of potentially severe fallout from a fatal crash involving Autopilot.

Tesla delivered just 63,000 cars in the first quarter but expects to deliver 90,000 to 100,000 cars in the second quarter, and 360,000 to 400,000 for the year. Ives said hitting the full-year target is going to be a “Herculean task” and sees 340,000 to 355,000 as a more likely scenario.

A spokeswoman for Tesla in Beijing had no immediate comment, while a representative for the company in the U.S. didn’t immediately respond to an email.

Chief Executive Officer Elon Musk recently told employees in an email that he and Chief Financial Officer Zachary Kirkhorn will be looking closely at expenditures, shortly after pitching a future of autonomous robotaxis to investors as the key to Tesla becoming a $500 billion company.

“With a code red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavors when the company instead should be laser-focused on shoring up core demand for Model 3 and simplifying its business model and expense structure,” Ives wrote.


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