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Morgan Stanley Cuts Tesla Price Target
| 03/13/2019
- Analysts lower price target from $283 to $260
- Tesla shares fall 1.5%
- Cuts to first-quarter loss also predicted
Morgan Stanley analysts lowered their price target on Tesla shares from $283 to $260, and the electric carmaker’s stock fell on Tuesday as a consequence. The analysts said that they were uncertain about the company’s ability to generate and maintain the current impetus of its sales.
Tesla shares fell 1.5% after an analyst for Morgan Stanley, Adam Jonas, lowered his price target “to reflect higher free-cash-flow burn and a modestly lower long-term trajectory of volume.”
Writing to his clients, Jonas and his team said that although the firm had made some moves to cut their costs and prices in an effort to stimulate orders, they saw Tesla “hitting an air pocket in demand that is coming earlier than we expected.”
The Morgan Stanley team also revised expectations of a first-quarter loss down from $32m to $31.1m and reduced Tesla’s expected deliveries in the first quarter to 48,000 units, a significant reduction of 23%. According to their forecasts, a drop in average transaction prices in the range of $1,000 to $2,000 per unit will also come from cost cuts to the Model S and X cars.
The day before Morgan Stanley’s note, Tesla CEO Elon Musk formally countered the Securities and Exchange Commission regarding accusations that he had breached the terms of his previous settlement. Musk argued in a federal court in New York that the February 19 tweet at the center of the row “only repeated publicly-disclosed information, and was a reflection of my pride in Tesla’s success and its future.” Musk stated in firm terms that he did not believe the tweet contained any information of substantial value to Tesla and company shareholders.