Tesla Inc. (TSLA) has so far had a stone-rich 2019. A catastrophic loss in the first quarter, followed by a lack of delivery estimates in April, has put the Tesla growth tale on life support.
The assembly suggests that demand has peaked, despite several price cuts across Tesla's vehicle set-up, has pushed itself most bullish by Wall Street analysts in a more bearish position.
Investors should follow the warnings coming out of Wall Street. The wind of change blows and the mood seems to darken only from here.
Wedbush: A Focus of Focus
The demand history in Tesla is changing rapidly, and unfortunately, the company is not adapted to an evolving EV landscape (especially in the US) with the deliberate marketing and distribution logistics being necessary to cope with this difficult and complex handholding process for customers, employees and investors. To this point, in our 20 year coverage of tech stocks on the street, we have shown this quarter as one of the best debacles we've ever seen while Musk & Co. In an episode out of the Twilight Zone, as if demand and profitability are coming back magically to the Tesla story. "
The prospects of Wedbush have only darkened since then. According to Ives, recent antics and strategic fluctuations of CEO Elon Musk represent a dangerous loss of focus:
With a code red The situation at Tesla, Musk & Co. is expanding for insurance, robotaxis and other sci-fi projects / endeavors when the company should instead be laser focused on enhancing the core query for Model 3 and simplifying its business model and cost structure in our opinion with headwinds abound. "
In light of this development Wedbush has beaten his prizes from $ 275 to $ 230. It's hard to argue with Ive's logic. Tesla robot ax plans seem to be a little more than a fantasy, while even Warren Buffett has questioned his dubious plan to release an insurance product. Tesla has clearly decided to focus its attention on a far-flung future, rather than addressing the hard issues facing it today. It doesn't sound good to the company or its share price.
Morgan Stanley: A Problem with Demand
Another long-term bull, Adam Jonas from Morgan Stanley, has also balanced Tesla's monopoly. Jonas has moved closer to the bear camp in recent months, but his latest investment note is in strong relief from his previous speeches in the form of pure pessimism. According to Jonas, Tesla's valuation has run away from the foundation:
Demand is at the heart of the problem. Tesla has grown too large in relation to the long-term demand and puts great strain on the foundation. "
In most of 2018, analysts in Musk's story bought that Tesla was supply-limited, ie it could sell many cars it produced at will. The steep drop in deliveries in the first quarter and April threw this false assumption into strong relief As a result, Jonas now sees serious demand problems ahead.
In addition, Jonas now worries that Tesla has gone from a growth story of an emergency and restructuring story, but Jonas has opposed the desire to change his basic seat goal of $ 230. even though he cut his bearings from $ 97 to $ 10.
Baird: A Problem of Credibility
Although Wedbush, Morgan Stanley and other long-term bullish analysts beat Tesla after the first quarter debut, Robert W. Baird & # 39; s Ben Kallo in his pistols.In an April investor note, Kallo offered another full-throated approval:
We continue to see Tesla as a major disturbance and think n ye product introductions, production ramps, and further development of innovative technologies will drive growth. Even though we recognize it, it may take time for emotions to improve, over time we believe the shares will move higher when the company performs its growth strategy. "
But for all that has the chest, Kallo has been forced to bend his knee to an increasingly disturbing reality, cutting his price target from $ 400 to $ 340. Although Kallo is certainly a significant hairdresser, Kallo remains in The bear camp and choose to owe the latest stock weakness to messaging problems rather than basics:
Credibility issues, messaging / communication, and significant noise around TSLA have kept incremental buyers out of the market. "
Musk's personal credibility is certainly below increased control. But to ignore the obvious signs of collapsing demand, this is a poor service for investors. Kallo needs to confront this reality quickly enough.
Investors Eye View
Wall Street's journey towards Tesla has long been on its way. Many analysts refused to acknowledge the growing demand problems until they were tasted in the proverbial face. With the second quarter appearing to offer little improvement, investors should expect further downsizing and shortcomings in the bear camp.
Even at the very falling stock price, Tesla is still priced as a growth stock. As the second quarter seems to be lacking in estimates, investors should bend for another downward correction in the near future.
Disclosure: I am / we are short TSLA. I wrote this article myself, and it expresses my own opinions. I do not receive compensation for it (except from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.