From calling out the potential for profitability this year to hyping a production goal of 100,000 semi trucks in four years, Musk laid it all on the line Wednesday to Wall Street analysts. If he fails to deliver (which has happened in the past), Tesla investors better be prepared for bone-crushing losses.
At least that's the takeaway from analysts at UBS. Here is how Tesla's stock could crash 70% to $56, according to UBS.
"The absolute downside for the Tesla stock is material as we believe any significant problems with the current or future products would likely cripple the company in the early stages of its growth. Our downside scenario assumes vehicles sales of only 500k in 2025 and 8% operating margins. On storage, we assume sales of 5GWh and 10% margins. On solar, we assume sales of 500MW and 5% margins. This implies 2025 EPS of only ~$8/share. Using a 25x P/E multiple, the scenario implies a downside valuation of $56/share."
It should be told that UBS has a sell rating on Tesla with a $195 price target, so clearly they aren't being clouded by Musk Mystique. The team says Tesla is likely to need more capital to fund its ambitious production goals, among concerns such as rising industry competition.
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