Morgan Stanley issues a short-sell warning on Tesla ahead of earnings, predicting a potential 60% drop in stock price
JP Morgan reiterated its "Underweight" rating on Tesla, expecting the stock price to drop 60% to $145. Analyst Ryan Brinkman pointed out that Tesla's first-quarter delivery performance was poor, with an expected earnings per share of $0.30, below market expectations. Although Tesla's stock price is still up 50% from its peak in 2022, it faces execution risks and competitive pressures. Tesla will announce its financial report on April 22, and its stock price has recently fallen over 2%
According to the Zhitong Finance APP, ahead of Tesla's (TSLA.US) first-quarter earnings report, JP Morgan, which has a long-standing bearish outlook on Tesla, reiterated its "underweight" rating on the electric vehicle and autonomous driving company on Monday.
Analyst Ryan Brinkman pointed out that Tesla's first-quarter delivery report was disappointing, and the installation of energy storage devices also saw a year-on-year decline. Brinkman and his team currently expect Tesla's first-quarter earnings per share to be $0.30, down from the previous estimate of $0.43, while the market consensus is $0.38.
Brinkman stated, "We still believe that Tesla's stock price will decline by 60%, to our target price of $145 set for December 2026, and we advise investors to remain highly cautious about Tesla's stock. Although the rise in Tesla's stock price reflects a significant increase in market expectations for its earnings over the next few years, at the same time, there has been a substantial decline in the general expectations for all performance indicators at least until 2030. Therefore, investors must fully consider execution risks and the time value of capital." He noted that despite the weak growth in delivery volumes, "incredibly," Tesla's current stock price is still more than 50% higher than when delivery volumes peaked in June 2022.
Looking ahead, JP Morgan believes that the positive investment factors for Tesla, such as its highly differentiated business model, attractive product portfolio, and leading technology, cannot fully offset its above-average execution risks, increasingly fierce competition, ongoing brand image controversies, and the impact of valuation.
It is reported that Tesla will announce its first-quarter earnings report on April 22. Due to the first-quarter delivery volume falling short of expectations, Tesla's stock price has recently declined. The stock fell more than 2% on Monday, closing at $352.82, down 22% year-to-date
