Shares of Tesla (TSLA) - Get Report were on track to open below their early January levels after RBC Capital Markets analyst Joseph Spak slashed his one-year price target on what he expects to be a sharp drop in demand.
In a research note, Spak said he was lowering his price target to $380 from $530 while maintaining an underperform rating on the stock amid what he expects to be constrained demand in the second quarter, which may force the company to cut production.
Spak now expects 364,600 deliveries for 2020 and 572,100 deliveries for 2021, down from his prior estimates of 524,200 and 618,000, respectively.
"Ultimately, we see 1Q20 challenges given typical [end-of-quarter] push, very low 2Q20 demand given a weak auto market and lower mid-term growth as the consumer reels and Tesla's products are luxury," he said. "We believe this experience could dent the multiple investors will be willing to pay for the Tesla story."
While Tesla employees have been advised to stay home if they aren't feeling well, the automaker's manufacturing sites and headquarters in California are still open. That could change in the next two weeks if the U.S. sees the same impact from the outbreak as Europe, where auto production is on hold in some regions.
Meantime, the company has begun delivering on its highly anticipated Model Y electric sedan, which as of March has slowly begun to appear on North American roads.
Tesla's stock was down more than 14%, or $79.08 a share, at $467.54 in trading on Monday. The company's stock has dropped more than 30% in the past month. It touched an all-time high of $968.99 in early January.