Tesla Inc. (TSLA) - Get Report shares traded at a five-month low Monday after analysts at RBC Capital Markets trimmed their target for the stock and founder and CEO Elon Musk noted that prices for the group's clean energy cars would increase in the coming months.
RBC's Joseph Spak cut his price target on Tesla shares by $35 to $210 each, and trimmed his first quarter delivery forecasts for the flagship Model 3 by 4,500 units to 52,500, in a note published Monday that cited "meagre demand". JMP Securities also lowered its price target by around 3% to $394 per share, and reduced current year and 2020 earnings forecasts, citing U.S. market weakness and the group's u-turn on closing its dealership network.
"As we have moved through the first part of 2019, it is becoming apparent that Tesla's efforts to pull demand into 4Q before the federal tax credit expired worked well, perhaps better
than the company had planned." JMP analyst Joseph Osha said. "Indeed, based on our analysis we are not sure that U.S. demand will return to 4Q18 levels at any point this year."
"It is worth reiterating that our investment stance on Tesla has always been based on the potential the company has to make competitive gains over time," he added. "The undeniably challenging environment that Tesla faces at the moment is not enough to impact our fundamental stance on the company and its prospects."
Tesla shares were marked 1.33% lower Monday at $261.00 each after hitting 254.46 each, the lowest since October 22 and a move that would extend their year-to-date decline to around 17.4%.
Musk also faces a potential evidentiary hearing before U.S. District Judge Alison Nathan related to his October settlement with the U.S. Securities and Exchange Commission over his use of social media.
Musk's lawyers said Friday that a February 15 Tweet regarding 2019 vehicle delivery forecasts was "aspirational and optimistic", and did not include material information. This, his attorneys argued, meant the SEC's move to hold him in contempt of that agreement is "wrong at virtually every level."
Barclays analyst Brian Johnson said Monday that a "parallel universe" theory might explain Tesla's conflicting financial guidance, with formal statements suggesting annual deliveries of between 360,000 and 400,000 this year, and Musk's own February 15 Tweet suggesting a number closer to 500,000 units.
"With a range of 360k (low end of published delivery guide) to 600k units (high end of Musk comments assuming deliveries), Tesla automotive revenue 'guide' appears to range for ~$22.5bn to ~$35bn - which some investors could possibly view as a material difference," Johnson wrote. "If the second universe is interpreted as still only having 400k deliveries, model 3 inventory build would be 200k units costing ~$8bn of cash drain.