Why Tesla Could Drop 70%

Analysts at Bank of America are not buying into the Tesla Motors Inc TSLA hype. In fact, BofA Analyst John Lovallo just cut his price target for the electric-car manufacturer to $65, from $70 previously. That’s not a misprint – Lovallo expects the stock to plummet more than 70 percent.

Lovallo said that both the company’s management and Tesla bulls argue that the company is constrained only by capacity and supply – issues that will be resolved. However, the analyst argued that the real issue for Tesla is much more critical: no demand. In fact, Lovallo even accused Tesla of “pulling back on production” in order to “create the appearance of rising demand.”

In Tesla’s Q4 earnings report, the company missed earnings expectations and also failed to deliver 1,400 cars in 2014.

Tesla is trading flat today after falling more than 4.5 percent yesterday on Lovallo’s note.