There isn’t a more divisive stock in the market right now than Tesla (NASDAQ:TSLA), and there isn’t a more divisive CEO than Elon Musk. To Tesla stock bears, Musk is something more akin to a snake oil salesman with a record of broken promises. Furthermore, Musk has put his credibility on the line with promises for profits and cash flow in Q3 and Q4, and Tesla bears are betting that he will once again fall short.
Goldman Sachs analyst David Tamberrino is firmly in the Tesla bear camp, with a Sell rating and price target of $210, which implies a downside of 25% from current levels. (To watch Tamberrino’s track record, click here)
In a research note issued yesterday, Tamberrino wrote, “While we see the potential for a better near-term backdrop with growth in Model 3 production/deliveries driving positive FCF in 2H18, we believe this will likely not be sustained as working capital tailwinds abate and as spending ramps back up after a period of cash conservation. Further, we see the medium-to-longer term industry backdrop as challenging for Tesla’s products; this follows from an increasing number of EV launches from both traditional OEMs and other start-up competitors – at a time when the company’s product cadence hits a gap. Ultimately, we believe the intensifying industry dynamics combined with the phase out of the US Federal EV Tax Credit for Tesla customers – driving an exhaustion of higher price point buyers – could weigh on company gross margins and profitability. Altogether, we remain bearish on the company’s ability to execute, achieve its targeted production ramp/margins, and sustain FCF generation.”
As far as the troubled electric car giant’s verdict on the Street, it is a toss-up among analysts, as TipRanks analytics exhibit TSLA as a Hold. Out of 27 analysts polled in the last 3 months, 8 are bullish on Tesla stock, 10 remain sidelined, and 9 are bearish on the stock. With a return potential of nearly 15%, the stock’s consensus target price stands at $322.73. (See TSLA’s price targets and analyst ratings on TipRanks.)
As of this writing, Tesla shares are trading at $280.13, down $8.82 or -3.05%.