Tesla Inc. (TSLA) - Get Tesla Inc Report shares traded sharply lower Thursday after analysts at Goldman Sachs cut their price target on the stock while arguing that Wall Street demand forecasts for the clean-energy carmaker are likely too optimistic.
Goldman analyst David Tamberrino cut his 12-month price target on Tesla to $158.00 from $200.00 while maintaining a "sell" rating for the stock, citing a "lower probability for the company achieving our upside volume scenarios". Tamberrino said that while deliveries in the current quarter are likely to meet market forecasts, volume estimates for the second half of the year look generous "considering there are fewer levers (such as lower prices and leasing options) to pull to stoke demand going forward."
"Further, when coupled with a lack of direct impetus to open up new demand pockets (other than introducing incentives or more attractive financing rates) and another step-down in the US Federal Tax Credit for Telsa vehicles beginning on July 1, we believe 2Q19 was a better environment for demand and thus deliveries, but to a level that is likely not sustainable," Tamberrion said in a client note.
Tesla shares were marked 3.6% lower Thursday, after gaining as much as 1.2% in pre-market dealing prior to the Goldman note, to change hands at $218.13 each.
Speaking to investors at the company's annual shareholder meeting in Mountain View, California, earlier this moth, founder and CEO Elon Musk said there was a "decent chance" of a record quarter, which the company has said could mean deliveries of between 90,000 and 100,000 clean-energy cars.
Musk added that sales had "far exceeded" production over the three month period that will end later this month, and that he expects to add the Model Y SUV to the group's line-up later this year. That assessment followed a report from the tech-focused publication Electrek reported that a massive push to drive end-of-quarter sales could lead to record delivers, and that Tesla has already shifted 33,000 cars in North America this quarter, with hopes of a similar tally for the month of June as the company incentivises employees with new bonuses. Tesla's quarterly record of 90,700 deliveries was registered over the final three months of last year.
Under pressure from shareholders, potential China tariffs, increasing competition and myriad production challenges, Musk has sought to steady the stock's precipitous 2019 decline with a tighter grip on costs and a renewed focus on deliveries.
Last month, Morgan Stanley analyst Adam Jonas sent shares in the group sharply lower after he reduced his "bear case" outcome for the stock price, a view based on a series of worst-case scenarios for Tesla, to $10 a share from a previous estimate of $97 amid increasing concern it could find itself trapped in a tech and trade war between Washington and Beijing.
Jonas's estimate is for Tesla sales in China, between 2020 and 2024, to generate around $9 billion in revenues. However, should officials in Beijing respond to the increasingly damaging trade war and target Tesla with reprisal tariffs or restrictions, that figure could be sliced in half and carve more than $16.4 billion in market value from the Palo Alto, California-based company.