Tesla 2018 Model 3 sedans sit on display outside a Tesla showroom in Littleton, Colo. (Photo: AP)
Late last year, Tesla Inc. was fully charged and cruising down the highway on Autopilot.
Shares were trading above $370 each, sales of the Model 3 small electric car were strong and the company had appointed a new board chair to rein in the antics of sometimes impulsive CEO Elon Musk.
But around the middle of December, investors started having doubts about the former Wall Street darling’s prospects for continued growth, and the stock started a gyrating fall that was among the worst in company history.
For the year, the share price is down around 40%, largely on concerns Tesla is running out of buyers for its vehicles, which range in price from a base $35,400 Model 3 to a larger Model X SUV that can run well over $130,000.
Morgan Stanley analyst Adam Jonas, on a private call with investors this week, raised the possibility that Tesla would have to be restructured due to rising debt and falling sales. A leaked memo to employees from Musk that said sales were up stanched the stock’s bleeding, and no one is really certain about what’s next.
It all depends on whether Tesla can produce enough cars at its Fremont, California, factory and whether people keep buying them. Musk’s memo from Wednesday said the company has 50,000 net new orders this quarter and it could pass record deliveries of more than 90,000 in the fourth quarter of last year. That could generate enough cash to reverse the company’s fortunes. But many analysts are skeptical. Morgan Stanley’s Jonas didn’t think sales would be that strong.
“We see shares continuing to trade lower on a lack of near-term catalysts and likely cut to vehicle sales guidance,” CFRA analyst Garrett Nelson wrote in a note to investors Thursday. He cut his one-year stock price target $50 to $150.
Senior Analyst Jessica Caldwell of Edmunds, which provides content to The Associated Press, said Tesla has an uphill climb.
“There doesn’t appear to be anything in the (product) pipeline that is going to save them,” she said. “Now Tesla seems to be losing the confidence of its biggest cheerleader, Wall Street.”