Why Tesla (TSLA) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Tesla Motors Inc  (TSLA) are tanking 7.92% to $257.08 today after the electric automaker received a negative note from analysts at Morgan Stanley  (MS) this morning and had its $320 price target removed.

The firm gave a cautious view, but maintained its "overweight" rating, and said the company's shares have run up a bit too aggressively in recent weeks.

Morgan Stanley said Tesla enjoyed a solid run in the past month and a half, but it's possible that the stock does not deserve such a high valuation due to the execution risk involved with its upcoming battery factory, and its aim to sell half a million vehicles annually by 2020.

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Tesla Motors CEO Elon Musk echoed a similar stance earlier this month when he said that he believes shares are "kind of high" at the moment.

Separately, TheStreet Ratings team rates TESLA MOTORS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TSLA's very impressive revenue growth greatly exceeded the industry average of 12.0%. Since the same quarter one year prior, revenues leaped by 89.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, TSLA's share price has jumped by 71.42%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • TESLA MOTORS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TESLA MOTORS INC continued to lose money by earning -$0.71 versus -$3.70 in the prior year. This year, the market expects an improvement in earnings ($1.13 versus -$0.71).
  • The gross profit margin for TESLA MOTORS INC is currently lower than what is desirable, coming in at 34.80%. Regardless of TSLA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TSLA's net profit margin of -8.04% significantly underperformed when compared to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Automobiles industry. The net income has significantly decreased by 102.9% when compared to the same quarter one year ago, falling from -$30.50 million to -$61.90 million.
  • You can view the full analysis from the report here: TSLA Ratings Report

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