TSLA – Tesla Inc. is more likely to become a “niche luxury” car maker than a mass-market one.
Tesla Inc. is more likely to become a “niche luxury” car maker than a mass-market one, analysts at Barclays said in a note Thursday.
The analysts cut their price target on Tesla TSLA, +0.08% stock to $150 from $192, implying a 20% downside to Thursday’s share price.
Tesla shares fell nearly 2% on Thursday, bringing monthly losses to 21% as the company has been beset by Wall Street criticism in recent weeks.
Recent stock price declines reflect “shrinking confidence” in upsides for the company, “and a higher likelihood that Tesla is at best a niche auto maker,” said the analysts, led by Colin Langan.
Model 3 demand is stagnating in the U.S., the company still doesn’t have a path to “significant auto profitability,” and solar storage installations have declined in the past two quarters, the analysts said, naming the main challenges.
Moreover, Chief Executive Elon Musk has pivoted to a “hyperbull” robotaxi scenario, but “his efforts to spring excitement around Tesla’s full self-driving capabilities was broadly met with the appropriate skepticism,” they said.
“We expect more investors to gravitate back to Tesla’s near-term fundamentals of demand, profitability, and cash generation,” the analysts said.
The stock’s downward spiral kicked off midmonth mostly as a reaction to a leaked email from Musk to employees mentioning strict cost-control measures, including Musk personally scrutinizing expenses.
Tesla tapped capital markets earlier this month. It ended the first quarter with $2.2 billion in cash, $1.5 billion less than at the end of 2018, in part due to a $920 million convertible-bond payment in March.
Shares have lost 43% this year and 36% in the past 12 months, contrasting with gains of 11% and 2.4% for the S&P 500 index SPX, +0.37% in the same period.
Tesla Inc. shares were trading at $189.50 per share on Thursday afternoon, down $0.36 (-0.19%). Year-to-date, TSLA has declined -43.06%, versus a 12.16% rise in the benchmark S&P 500 index during the same period.
TSLA currently has a StockNews.com POWR Rating of F (Strong Sell), and is ranked #20 of 25 stocks in the Auto & Vehicle Manufacturers category.
This article is brought to you courtesy of MarketWatch .
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