Tesla’s (TSLA) stock falling today ended an incredible rally that lasted a few weeks. A new analyst downgrade and report of sales dropping in California seems to have done the trick.

The stock has been on a very strong rally over the last few months, and it consistently pushed to new highs over the last month.

After being trading in the $300s just last month, the stock surge past $400 and even $500 a share last week.

Today, it opened down below $500 a share after Morgan Stanley analyst Adam Jonas downgraded the stock to a “sell.”

However, he is increasing his expectations on Tesla’s business:

We are increasing our expectations for the core auto business and decreasing our expectations for the mobility business, resulting in a net material increase in our target price. Our revenue forecast through 2030 increased approximately 10% on average vs. our prior forecast, culminating in a roughly 300,000 unit increase by 2030 (to a total of 2 million units in annual volume) vs. our previous forecast of 1.7 million in volume by 2030.

While Jonas is increasing his expectations, he doesn’t think that it supports the recent rally:

We are encouraged by Tesla’s execution and think it deserves to be among the world’s most valuable auto companies, and is perhaps the most important auto company in the world given its EV leadership. However, we think investors will be presented with more attractive opportunities to own the stock in the future.

As we previously reported, Jonas has a strange range of price targets for Tesla’s stock, which it raised by $110 to $360 per share for the main target, but he downgraded the stock to “underweight.”

The downgrade didn’t help the stock, but furthermore, a Cross-Sell report based data from state motor vehicle records claims that Tesla’s sales are down almost 50% during the fourth quarter in California.

Shane Marcum, vice-president of Cross-Sell, claims that Tesla has achieved peak sales in the US:

One can assume that Tesla has hit peak performance in the US because they have not exceeded their 2018 results for five months now.

California is Tesla’s biggest market in the US.

Electrek’s Take

More opportunities to buy the stock? Sure, Jonas, you just created one. That’s a self-fulfilling prophecy.

As for US sales, I can’t believe people still believe these claims of peak sales.

Tesla is still production constrained, and if they happen to dedicate some production to a specific market in a certain quarter, like the Netherlands and China, for example, then of course, another market like the US is going to be affected.

I am sure Tesla can beat 2018 sales in the US again, especially with the Model Y coming.

Disclosure: I am long TSLA.

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