Tesla shares could fall as low as $10, Morgan Stanley analysts predicted Tuesday.
The investment company has reduced its bear forecast from $97 to $10 per share, saying it was worried about Chinese demand for the firm products.
“Our revised bear case assumes Tesla misses our current Chinese volume forecast by roughly half to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government/regulatory attention,” said analyst Adam Jonas in a note to investors.
The $10 per share mark is an extreme example and well below the company’s trade level, which is over $200 per share in mid-morning trading Tuesday. It does show rising concerns among investors.
Bear models from investment companies look at worst case scenarios and are not predictions of performance under ordinary conditions. Morgan Stanley’s “.
Jonas also cited Tesla’s debt burden as a factor in his shift in the worst case model. The business recently procured $521 million in loans from Chinese banks.
China is an important market for the automaker. It’s building a $5 billion mill in the country which will allow it to bypass shipping costs and make Tesla vehicles cheaper to Chinese consumers.
The country has also been a drag on the stock, though. Shares plunged earlier this month amide worries that China’s tariff retaliation would soon hit cars, affecting Tesla’s bottom line.
Tesla’s stock was shy of 2% in trading Tuesday.
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