Barclays Cuts Tesla Price Target To $150

Tesla Inc TSLA shares are trading at their lowest levels since 2016, and one analyst said Thursday there may still be more downside ahead.

The Analyst

Barclays analyst Brian Johnson reiterated his Underweight rating and lowered his price target from $192 to $150.

The Thesis

Tesla remains the most hotly contested battleground stock on Wall Street, but Johnson said the market finally seems to be acknowledging the bear case is a realistic one. Johnson has been arguing for years the optimistic bull case for Tesla and its stock hasn’t been grounded in reality, and said it's becoming increasingly likely Tesla will "stall" as a niche luxury electric vehicle maker.

If that niche luxury outcome plays out, Johnson said Tesla has a present value of about $133 per share.

“Ultimately, in our view, what drives Tesla valuation, more than anything else, are the probabilities around dream/’blue pill’ scenarios, which keep multiples highly elevated off the hopes of hyper growth which now seem less likely,” Johnson wrote in a note.

He said CEO Elon Musk’s recent pivot to the robotaxi business is an example of the type of dream growth scenarios that drove Tesla’s extreme valuation in the past. So far in 2019, investors are reacting to these plans with the appropriate amount of skepticism, Johnson said.

In the meantime, Tesla still has not demonstrated a path to significant auto profitability, and demand for its solar business has stalled.

Price Action

Tesla shares traded $190.15 on Thursday morning and are down 44.5 percent overall in the past six months.

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