Tesla Motors Inc has cruised into bear territory after failing to impress investors that it is ready to discard the garb of a tech startup and become a serious carmaker. The fact that investors are having second thoughts about Tesla is evident in the bear hug that the stock has been enduring in the last couple of weeks. It appears that even the firm’s autopilot software update might not be able to drive the share up over the next couple of days.
Over the weekend, Tesla announced that update 7.0 of its in-car software for the Model S will be delivered this week. Update 7.0 will have some of the latest advanced features of the Tesla Motors Autopilot tech but you won’t be able to sleep off in a Model S and wake up at your destination yet. Elon Musk has raised hoped about what autopilot will be able to achieve in its cars but it seems the firm needs all the positive news it can get to get the stock back in the good books on Wall Street.
Analysts won’t take a ride with Tesla with or without autopilot
The voice of the bear started booming from analysts at Barclays Research where analyst Brian Johnson reduced his price target on the stock from $190 to $180 per share. The new $180 price target sets Tesla up at a 21.63% discount to Friday’s closing price of $222.69. The analysts at Barclays are not confident that Tesla will outgrow its startup phase before competitors start delivering their own EVs.
The firm is about 17,000 cars behind on its target to deliver 50,000 cars at the low end of the guidance for this year. The Barclays analysts in a research note said, “Our fundamental difference with the Tesla bulls lies around the company’s ability to become a successful mass-market [automaker] — while the bulls believe Tesla will be the next Ford, we see many challenges ahead”.
Analysts at Morgan Stanley have also seen Tesla resting in its bear hug as they reduced their price target from $465 to $450. Morgan Stanley’s price target suggests that the stock is trading at a discount and that there’s upside potential ahead. However, Adams Jonas noted that fuzzy nature of the price of the Model X, which “and easily $10k to $15k higher than we had expected”, might cause the firm to lose some orders.
Cautious optimism rises on Tesla
Analysts are being cautious about Tesla but they are trying to avoid triggering a selloff on the stock. The Morgan Stanley analysts also noted “Unless Tesla introduces significantly cheaper versions soon, we do not expect the company to deliver more than 20,000 units of Model X in 2016, particularly when considering an increasingly difficult environment for imported luxury vehicles into China”.
Analysts at Robert W. Baird & Co are not optimistic about Tesla and analysts at S&P Capital IQ are also taking a cautious approach to the stock. Ben Kallo of Robert W. Baird reduced his price target from $335 to $282 citing the fact that “higher-than-expected price… could reduce the market size.” Efraim Levy of S&P Capital IQ said “We are not enthusiastic to buy at these levels … But we are not saying ‘sell’ either.”