Lucy Nicholson / Reuters
- Tesla shares fell early Monday after an analyst cut his price target on the stock in a report that followed a session of heavy selling Friday.
- The Wedbush analyst pointed to a host of concerns around the electric-car maker, including an email that CEO Elon Musk sent to employees last week detailing cost-cutting measures.
- Investors dumped the stock late last week after the National Transportation Safety Board said Tesla’s Autopilot feature was engaged during a fatal crash involving a Model 3 in March.
- Watch Tesla trade live.
Tesla shares fell early Monday after an analyst cut his price target in a searing report, drawing on a host of issues the electric car-maker is facing.
“We continue to have major concerns around the trajectory of Tesla’s growth prospects and underlying demand on Model 3 in the US over the coming quarters,” Wedbush analyst Dan Ives said in a note to clients late Sunday.
He added that 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.”
Tesla shares fell by as much as 5.2% early Monday, and were on track to open at their lowest level since December 2016. Ives cut his target to $230 from $275 a share, meaning he’s still betting on a 15% rally from here. Less than a month ago, he had a $365 price target, making him one of the most bullish analysts on Wall Street.
He and a cadre of other Wall Street analysts have drastically tempered their view of the stock in recent months as growth, profitability, and demand concerns have weighed heavily on Tesla.
Read more: Tesla analyst slashes his target again, and says everything you think you know about it is in question
Though Ives saw Tesla’s announced capital raise earlier this month as a “smart strategic step forward,” he’s increasingly concerned over the company’s “cash crunch” while building out its Shanghai factory and attempting to ramp Model 3 production.
And the revelation that Musk is urging employees to be cost-conscious with their company expenses — per an internal email leaked to the news media and confirmed by Business Insider — does not exactly inspire confidence, Ives said.
Read more: Elon Musk says in email to employees that new cost-cutting measures are the ‘only way for Tesla to become financially sustainable’
He added the firm has “continued concerns around Tesla’s ability to balance this ‘perfect storm’ of softer demand and profitability concerns which will weigh on shares until Musk & Co. prove otherwise in terms of delivering solid results over the coming quarters.”
The report followed a session of heavy selling Friday.
Tesla shares closed the day down 7.6% after the National Transportation Safety Board said in a preliminary report that Tesla’s Autopilot feature was engaged during a fatal crash involving a Model 3 in March.
Tesla was down 37% this year through Friday’s market close.
Now read more coverage from Markets Insider and Business Insider:
JPMorgan’s quant guru breaks down the market’s ace in the hole for fighting Trump’s trade war — and explains why stocks could surge 12%
Oil is rallying on supply worries after Trump threatens the ‘official end of Iran’
Uber’s historic loss, Lyft’s abysmal month, Pinterest’s earnings disaster: Why the white-hot IPO market is full of duds