Tesla Motors Inc may have tough going ahead as Morgan Stanley’s Adam Jonas – one of the most bullish analysts – said he is able to see some signs that in the coming years the firm will have to face tougher growth prospects. On Monday, in a note to investors, Jonas lowered his price target on Tesla from $450 to $333, citing lower sales estimates, greater competition and low energy prices.
Tesla bull turns bearish
Though Jonas lowered the price target, he maintained an ‘overweight’ rating on the stock, and is a lot more optimistic about Tesla than most other analysts. Even now, the price target of $333 is higher than the Wall Street average by $49.
“We are lowering our price target by 26 percent to reflect our lowered volume expectations for Model X and Model 3, a lower valuation for Tesla Energy, and accelerating competition in the mobility business,” the analyst noted.
There are three prime reasons why Jonas turned more cautious on Tesla. Firstly, Jonas cut his annual sales estimates for the Model X by 15%. He said the firm is ramping production, but the falcon-wing doors of Model X pose the biggest manufacturing and engineering challenge.
Secondly, the competition in shared mobility has increased. The investments that the automakers and the tech firms are making in electric, shared and autonomous-drive cars is increasing because of which Tesla will have to face more competition.
Third reason is the revaluation of Tesla Motors Inc Energy. The energy storage business of the EV firm, including the production of the Powerwall home battery storage units, should have a lower valuation, believes Jonas.
Stock up despite price cut
Despite the numerous warnings from Tesla’s biggest bull, the investors were sending shares of the automaker up. The report from The Detroit News about the firm filing an application for gaining dealership license in Michigan could be one of the reasons. The firm will be able to sell its cars directly to the consumers after obtaining the license.
Apparently, the firm is seeking a Class A dealership license for the new and used cars, and has submitted the applications for the same to the state’s Secretary of State Office in November. Another reason that may have pushed the stock up is CEO Elon Musk exercised his stock options to reinvest over $100 million into it. Musk now holds 22% in Tesla worth around $5.6bn, says a report from Fortune.
At around 10 am EST, Tesla Motors Inc shares were down over 3%. Year to date, the stock is down almost 21% while in the last one-year, it is down almost 10%. The stock has a 52-week high of $286.65 and a 52-week low of $181.40.