Wedbush Lowers Tesla Price Target, Shares Fall Below $200

Tesla Inc TSLA shares dropped below $200 for the first time since 2016 on Monday after one analyst said things will likely get worse for Tesla before they get better.

The Analyst

Wedbush analyst Daniel Ives reiterated his Neutral rating for Tesla and lowered his price target from $275 to $230.

The Thesis

Ives said Tesla and CEO Elon Musk have an uphill climb over the next several quarters given pressures for Tesla to cut costs and major concerns over Tesla’s near-term demand and guidance.

“With an inexperienced CFO at the helm, micro management of expenses now a focus (e.g., Musk employee email/memo from last week per media reports), and demand issues a dark cloud over Fremont, we have continued concerns around Tesla's ability to balance this ‘perfect storm’ of softer demand and profitability concerns which will weigh on shares until Musk & Co. prove otherwise in terms of delivering solid results over the coming quarters,” Ives wrote in a note.

Ives is projecting between 340,000 and 355,000 in 2019 vehicle deliveries for Tesla, well short of the company’s guidance of between 360,000 and 400,000 vehicles.

In the longer term, Ives said Tesla’s production targets are attainable, but the company hasn’t adapted well to an evolving electric vehicle market.

Ives said Musk is taking the wrong approach by expanding into projects like insurance, robotaxis and other moonshot technologies when Tesla should instead be laser-focused on trimming costs and shoring up Model 3 demand.

Price Action

Tesla's stock traded lower by 5.3 percent on Monday to $198.92 per share.

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