For years in this column we have called Tesla’s valuation out as fake, and finally the T-Bulls have relented and thrown in their towels(NASDAQ:TSLA)
There is a “crisis of confidence” in the company, said Yahoo Finance senior columnist Rick Newman on The First Trade. When asked if Tesla’s stock could nosedive to 125 a share from about 200 currently before the electric car company’s next earnings report, Newman remarked: “Why not?”
Mr. Newman is on the mark here, as Tesla hits the skids.
To say Wall Street is now hating it’s 1-Time darling Tesla again is a gross understatement. And the criticism and harsh analysis of the rentier EV maker is well-deserved.
Recent weeks have brought news of Tesla CEO Elon Musk personally overseeing fresh expense cuts, a slashing of prices on the expensive Model Xs and Model S‘s and a new $2.7-B capital raise.
Wall Street smells blood, and has acted accordingly in an effort to get their research publicized and make clients a boatload of money.
Wednesday, Citigroup (NYSE:C) analyst Itay Michaeli was the latest hammer the head of the fake Tesla investment thesis. Mr. Michaeli reiterated his Sell rating on Tesla, citing concerns on sluggish consumer and free cash flow generation.
Following on, Bank of America analyst John Murphy reiterated his Sell rating on Tesla after Mr. Michaeli’s Wednesday. The tone of Mr. Murphy’s note was horrific if you work at Tesla or own the stock.
“Importantly, there still remain a number of major hurdles ahead for Tesla, including: (1) the ongoing Model 3 production ramp and future operational challenges associated with expanding the product lineup (Model Y, Semi, Roadster, etc.); (2) what could remain very material cash burn in coming quarters (from ongoing delivery/logistic issues, Shanghai factory construction, etc.) that could pressure Tesla’s liquidity even with the recent capital raise; (3) a faster-than-usual spike and burnout pattern for Model S/X and now potentially Model 3; and (4) the prospect of new competition and longer-term obsolescence,” Mr. Murphy wrote..
Wedbush analyst Dan Ives, once a T-Bull slashed his price target on the stock. Mr. Ives said that while Tesla may avoid bankruptcy, he does see the company needing another $1-B capital raise to survive.
Tuesday, Morgan Stanley analyst Adam Jonas, also a former super T-Bull, reduced his worst case scenario price target on Tesla to 10 and I posted on Twitter “Why not 1”
Tesla experts across the board are voicing concerns on demand and the health of Tesla’s operations, something that Shayne and I have been writing about for the last few years here.
Tesla’s stock is down more than 40% YTD. The move is probably 100% justified by the company’s weak fundamentals and CEO Musk’s ongoing erratic management style. At this point it’s unclear as to what will stop the Tesla bleeding, the money tourniquets have not worked.
Again, Mr. Newman’s astute comment, a “crisis of confidence” in Tesla is in full effect.
HeffX-LTN’s overall technical analysis for TSLA is Very Bearish, there is no support for the stock in here, 140 next, then 75, then bankruptcy is my call.
Tesla finished the day Wednesday at: 190.65 off 9% on the day (inc extended trading).
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