Tesla Analyst Slashes Price Target From $710 to $425, Citing ‘Darker Clouds Over Fremont’

Tesla’s near-term outlook has changed dramatically in the last few weeks, said Wedbush’s Dan Ives.
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Wedbush analyst Dan Ives significantly lowered his price target on Tesla  (TSLA) - Get Report on Thursday from $710 to $425, citing the dramatically lowered global demand environment created by the coronavirus pandemic.

“In the U.S. and Europe with consumers in a virtual lockdown facing a once in a century-like outbreak focusing on their health, food, and flattening the curve, buying a new Model 3 and other auto purchases is very low on the priority list,” Ives wrote in a note.

Shares of Tesla were rising 9.0% to $393.98 in early market trading on Tuesday in a rebound from Wednesday's sharp sell-off. Elon Musk offered on Twitter late Wednesday to build ventilators at Tesla’s factories if there was a shortage, although he provided no additional details. It was also unclear how much Tesla had reduced its staffing levels at its Fremont, Calif. factory to comply with a local government order to shut down.

Ives said Tesla’s original 2020 target of delivering more than 500,000 vehicles is now a “virtual impossibility,” and that a more realistic possibility is deliveries in the 400,000 to 415,000 range.

Ives, who has a neutral rating on the stock, nonetheless believes Tesla’s longer-term trends from 2021 to 2025 remain healthy. But he said it would be more prudent to view Tesla now through the prism of how it can weather the current huge challenges faced by the global economy.

“We would rather investors start to value Tesla off more negative economic scenarios/stress test model to better put some goal posts around what delivery levels, profitability, and cash flow look like rather than a more rosier glass half full scenario that appeared well within reach just a few weeks ago before this pandemic put the brakes on the global economy.”