Another analyst is cutting his price target for Tesla Inc. after the electric car maker on May 21 fell to the lowest since December 2016.
Citigroup analyst Itay Michaeli lowered his price target to $191 from $238, highlighting “negatively skewed” risks and lingering demand and cash flow concerns. Tesla fell for a sixth day in early trading May 22, shedding as much as 3% to $199. Shares closed down 0.1% at $205.08 on May 21 after slipping below $200 during the day.
Tesla’s $2.4 billion capital raise this month was “a positive step but won’t necessarily get the balance sheet out of the woods” if the company can’t meet free cash flow targets, Michaeli wrote. “An automaker’s balance sheet is always subject to the confidence ‘spiral’ risk,” and Tesla must provide a “more formal” outlook — good or bad — soon.
Michaeli said Tesla may have erred by “externally targeting level-5/urban robo-taxis next year, a claim that ultimately hurt credibility,” though the company’s AV pivot “aligns well” with Citi’s long-term views about the industry.
Earlier this week, Tesla sustained multiple blows at the hands of Wall Street analysts.
Morgan Stanley slashed its worse-case scenario for the share price to just more than $10 over concern Tesla has saturated the electric car market. Robert W. Baird & Co.’s longtime Tesla bull, Ben Kallo, said it may take several months for the negative narrative surrounding the carmaker to shift, and he cut his price target to $340 from $400. Wedbush analyst Dan Ives wrote that Tesla faces a “Kilimanjaro-like uphill climb” to hit targets for profitability in the second half of the year. He cast doubt on underlying demand for the company’s first mass-produced vehicle, the Model 3 sedan, and cut his price target to $230.
Wall Street wasn’t alone in throwing shade on Tesla. On May 22, Consumer Reports said Tesla Autopilot poses safety issues, reporting that the Model 3 sedan in its vehicle text fleet shifts lanes in ways that a safe human driver wouldn’t.