Tesla’s stock (TSLA) has been on a tear this quarter following the first show of profit in a long time, but it’s now getting knocked down a peg by Wall Street calling for a correction.
TSLA was up 21% since the beginning of the quarter as of last week, but it fell over 5% this week.
Partly because Morgan Stanley and Goldman Sachs are putting pressure on the stock.
Adam Jonas, Morgan Stanley’s analyst covering Tesla, issued a note to clients warning that he sees Tesla peaking this quarter (via Bloomberg):
“We view 4Q18 as the transition from stage 1 to 2 and believe it marks an emerging peak in sentiment and potentially the share price.”
The analyst admits that the last quarter was “very strong”, but he doesn’t necessarily believe that it represents an ongoing trend:
“While we acknowledge the significance of Tesla’s very strong 3Q result, we do not believe investors will assume the company is fully self-sufficient without a more sustained period of execution,”
Jonas has been expecting a $2.5 billion capital raise from Tesla this year that has yet to happen.
He is maintaining a ‘hold’ rating on the stock despite a $291 price target, which represents a significant downside over the current price.
Adam Jonas is ranked #516 out of 5,100 Analysts on TipRanks with a success rate of 49% and an average return of 8.1%. He has been maintaining an equal-weight rating on Tesla’s stock over the last year:
Furthermore, Goldman Sachs also issued a new negative note on Tesla today.
Analyst David Tamberrino sees “a lull in demand starting in 1Q19 that may not be fully made up by initial deliveries across Europe.” He expects “incremental competition is coming for the company’s established products.”
The firm recommends to sell the stock and it has a $225 price target.
David Tamberrino is ranked #4,437 out of 5,100 Analysts on TipRanks with a success rate of 43% and an average return of -10.6%. He has been maintaining a sell rating on Tesla’s stock over the last year:
Interestingly, this pressure on Tesla’s stock from Wall Street comes as the company needs to maintain a relatively high share price in order to be able to use stocks to pay back some large notes.
If they can’t do that they would have to do it with cash, which would likely force them to go to Wall Street to raise more capital like Morgan Stanley has been predicting.
Is that what you would call a self-fulfilling prophecy?