Tesla shares plunge below $200 for first time in more than 2 years

Analyst Dan Ives described the situation as being ‘code-red’

Tesla shares fell as much as 7.5 per cent to a 52-week low in early morning trade in New York. Photograph: Mark Ralston/AFP

Tesla shares fell as much as 7.5 per cent to a 52-week low in early morning trade in New York. Photograph: Mark Ralston/AFP

 

Tesla shares plunged below $200 (€179) for the first time in more than two years on concerns the carmaker faces a “Kilimanjaro-like uphill climb” to hit profitability goals in the second half of the year.

In a note, Wedbush analyst Dan Ives described the electric-car maker’s predicament as a “code-red situation” and cut his price target on the stock to $230 (€205) from $275 (€246). Mr Ives slashed his target from $365 (€326) just last month.

Once among the most bullish analysts covering Tesla, Mr Ives said in his note he has “major concerns around the trajectory of Tesla’s growth prospects and underlying demand on Model 3 in the US over the coming quarters”.

Tesla shares fell as much as 7.5 per cent to a 52-week low in early morning trade in New York. The stock had closed at its lowest level in almost two-and-a-half years on Friday after chief executive Elon Musk called for a “hard core” review of all the company’s expenses and an analyst warned of potentially severe fallout from a fatal crash involving Autopilot.

Tesla delivered just 63,000 cars in the first quarter but expects to deliver 90,000 to 100,000 cars in the second quarter, and 360,000 to 400,000 for the year. Mr Ives said hitting the full-year target is going to be a “Herculean task” and sees 340,000 to 355,000 as a more likely scenario.

Representatives for Tesla didn’t immediately respond to requests for comment.

Personally scrutinise

Mr Musk recently told employees in an email that he and chief financial officer Zachary Kirkhorn will personally scrutinise expenditures following a worse-than-expected first-quarter loss.

When drumming up interest for a stock and debt offering earlier this month, Mr Musk pitched investors on a future of autonomous robotaxis as the key to Tesla becoming a $500 billion (€447 billion) company. Its market capitalisation is now less than $36 billion (€32 billion).

If Tesla is unable to earn profit in the second half of the year, the company may need to raise another $1 billion to $2 billion (€895 million to €1.7 billion) of capital, Mr Ives said in an interview with Bloomberg Television.

“With a code red situation at Tesla, Musk and co are expanding into insurance, robotaxis, and other sci-fi projects/endeavours when the company instead should be laser-focused on shoring up core demand for Model 3 and simplifying its business model and expense structure,” Mr Ives wrote in his report. – Bloomberg