Tesla (TSLA) falls below $200 amid ‘major concerns’ about company growth

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Tesla stock (NASDAQ:TSLA) dropped below $200 later the opening bell Monday amidst “major concerns” about Model 3 need and Elon Musk’s growth program for the company. In a current notice, Wedbush analyst Daniel Ives voiced his reservations about Tesla, describing the electric automobile maker’s recent predicament as a “code-red” situation.

Ives noted that it might require the company to take up a “Herculean” task to fulfill its end-of-year production prediction. Compared into Tesla’s production prediction of 360,000 into 400,000 vehicles this season, Ives said that a “best case scenario” for the company are a entire production of 360,000 into 370,000. The Wedbush analyst included that “given the current tea leaves in the field around demand,” that a entire production of 340,000 into 355,000 to get 2019 are more likely.

The Wedbush analyst also criticized the company for pursuing “sci-fi projects” instead of focusing on simplifying its business model. “With a code red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavors when the company instead should be laser-focused on shoring up core demand for Model 3 and simplifying its business model and expense structure in our opinion with headwinds abound.”

“Tesla is facing a quagmire as the company is in the midst of building out its next flagship factory in Shanghai with Giga 3, in the early stages of tooling/blueprinting its next Model Y for production slated for 2020, and ramping production of its mid-range and base Model 3 in the US, all while facing a growing cash crunch and high expense structure issue,” Ives added.

Considering Tesla’s present circumstances, Ives chosen to lose his price target for TSLA inventory from $275 to $230.

Needham analyst Rajvindra Gill also voiced reservations regarding Tesla’s Autopilot driver-assist attribute, which was discovered to have been engaged during a deadly Model 3 accident earlier this season. According into Gill, the report by the National Transportation Safety Board (NTSB) “could cast doubt on Tesla’s self-driving capabilities, which have been highly touted by Mr. Musk,” especially considering that “the Autopilot feature has been an integral component of the company’s perceived competitive differentiation and hence its high valuation.”

Tesla stocks have experienced a rough year up to now. Since approaching all-time highs past December, TSLA inventory has dropped over 40 percent, bolstered in part by the company’s lower-than-expected delivery and production amounts for the first quarter. Current headwinds, particularly the ongoing trade warfare between the United States and China, have weighed back on TSLA inventory as well.

As of writing, Tesla stock is trading -4. 36percent at $201. 82 each share.

Disclosure: I have no ownership in stocks of TSLA and don’t have any plans to initiate some positions within 72 hours.

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