Tesla stock (NASDAQ:TSLA) dropped below $200 after the opening bell on Monday amidst “major concerns” about Model 3 need and Elon Musk’s growth plan for the company. In a recent note, Wedbush analyst Daniel Ives expressed his reservations about Tesla, describing the electric vehicle maker’s current predicament as a “code-red” situation.
Ives noted that it would require the company to undertake a “Herculean” task to meet its end-of-year production prediction . In comparison to Tesla’s production prediction of 360,000 to 400,000 vehicles this year, Ives said that a case scenario” for the company would be a production of 360,000 to 370,000. The Wedbush analyst added that “given the tea leaves from the field around need a generation of 340,000 to 355,000 for 2019 would be more likely.
The Wedbush analyst also criticized the company for chasing “sci-fi projects” rather than focusing on simplifying its business model. “With a code red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavors once the company instead ought to be laser-focused on shoring up center requirement for Model 3 and simplifying its business model and expense structure in our opinion with headwinds abound. ”
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“Tesla is facing a quagmire since the company is in the middle of building out its next flagship factory in Shanghai with Giga 3, at the early stages of tooling/blueprinting its next Model Y for production slated for 2020, and ramping production of its mid-range and base Model 3 in the US, while facing a growing cash crunch and higher expense structure issue,” Ives added.
Considering Tesla’s current conditions, Ives opted to drop his price target for TSLA stock from $275 to $230.
Needham analyst Rajvindra Gill also expressed reservations regarding Tesla’s Autopilot driver-assist feature, which was found to have been engaged during a deadly Model 3 accident earlier this year. According to Gill, the report in the National Transportation Safety Board (NTSB) “could cast doubt on Tesla’s self-driving capabilities, which have been highly commended by Mr. Musk,” especially considering that “the Autopilot feature has been an integral component of the company’s perceived competitive differentiation and hence its high valuation. ”
Tesla stocks have had a rough year thus far. Since approaching all-time highs last December, TSLA stock has fallen over 40%, augmented in part by the company’s lower-than-expected delivery and production numbers for the first quarter. Current headwinds, particularly the ongoing trade war between the United States and China, have weighed down on TSLA stock .
As of writing, Tesla stock is trading -4.36% at $201.82 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
The post Tesla (TSLA) falls below $200 amid ‘important concerns’ about company growth appeared first on TESLARATI.
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