Another Wall Street Firm Turns Bearish on Tesla Inc (TSLA)

Tesla Inc (NASDAQ:TSLA) has fallen out of favor with another Wall Street firm. Needham & Co has downgraded the stock and noted that it worries there may be a rise in cancellations for Model 3 orders.

CNBC shares the firm’s take on Tesla.

Tesla shares fell on Thursday after Needham & Co downgraded the stock to sell from hold, citing a possible pick-up in Model 3 cancellations.

“Based on our checks, refunds are outpacing deposits as cancellations accelerate,” wrote analyst Rajvindra Gill in the note Thursday. “The reasons are varied: extended wait times, the expiration of the $7,500 credit, and unavailability of the $35k base model.”

The automaker made headlines earlier this month when opened up Model 3 sales to anyone that placed a $2,500 deposit, foregoing reservations in the process. While some observers believe that will lead to a boon in Model 3 sales, the Needham & Co. see things differently.

“In August ’17, TSLA cited a refund rate of 12%. Almost a year later, we believe it has doubled and outpaced deposits. Model 3 wait times are currently 4-12 months and with base model not available until mid-2019, consumers could wait until 2020,” Gill continued.

Tesla Inc shares fell $6.55 (-2.02%) in premarket trading Thursday. Year-to-date, TSLA has gained 4.01%, versus a 6.22% rise in the benchmark S&P 500 index during the same period.

TSLA currently has a StockNews.com POWR Rating of C (Neutral), and is ranked #9 of 24 stocks in the Auto & Vehicle Manufacturers category.