Tesla (TSLA) Stock Reverses Course Setting Bullish Price Target

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by Teuta Franjkovic · 4 min read
Tesla (TSLA) Stock Reverses Course Setting Bullish Price Target
Photo: Ian Kennedy / Flickr

Tesla CEO Elon Musk told employees in an e-mail late Sunday night that the electric car maker would shift its sales plans yet again, raising prices by about 3 percent on most of its cars and keeping more stores open than it had previously planned.

At present, Tesla’s market direction is anything but certain. The stock is basically in a range-trade with decent volume. If one knew nothing about this stock at all and just looked at the charts, they would guess that there was some investor optimism allied with a healthy dose of skepticism. This battleground of bulls/bears is what Citron Research leverages to try and get a high-profile marketing win if they turn out to be correct in their prediction.

They are now gunning for TSLA shares to break to $320. Those who follow the newsletter will know that Citron had been extremely bearish for a long time on Tesla’s prospects before suddenly changing that outlook in response to the firm’s recent share price woes. At the time of writing Nasdaq listed Tesla stock jumped for big 7,55% to $284.14.

What maybe helped is the report from cleantechnica.com’s Zachary Shahan where he claims that the atmosphere in Tesla’s factory is enormously different from the image of Tesla that you find in much of the media.

Also, wealth and investment manager Ross Gerber tweeted:

That’s slightly different from last week when the former International Monetary Fund (IMF) economist Mark Dow, said shorting Tesla might be the trophy trade for 2019.

Tesla caused controversy in recent weeks announcing it would shut its stores and shift worldwide sales to online only. The move was presented as a full embrace of e-commerce, and a cost-cutting measure that would enable Tesla to sell the base version of its electric sedan, the Model 3, at the long-awaited price of $35,000 finally.

Musk wrote:

“Potential Tesla owners will have a week to place their order before prices rise, so current prices are valid until March 18th. There will be no price increase to the $35,000 Model 3. The price increases will only apply to the more expensive variants of Model 3, as well as Model S and X.

To be clear, all sales worldwide will still be done online, in that potential Tesla owners coming in to stores will simply be shown how to order a Tesla on their phone in a few minutes. And the generous return policy of 1000 miles or 7 days, whichever comes first, should alleviate the need for most test drives. However, cars will still be available for test drives at stores at the potential Tesla owner’s request. Stores will also carry a small number of cars in inventory for customers who wish to drive away with a Tesla immediately.”

Landlords to Tesla: We Want $1.6 Billion

According to reports, Tesla currently has lease obligations to the tune of $1.6 billion and is contracted to pay $1.1 billion until 2023.

As the company said in its 2017 annual report, many Tesla stores are located at premium outlets and highly visible areas where the average tenant leases are in the 5 to 10 years range.

Federal Realty Investment Trust CEO Don Wood, who oversees two malls holding Tesla leases, said that the leasing industry is a “business of contracts” and the company will have to abide by the leases.

Exceptions can be made by landlords if a company is filing for bankruptcy protection, but for a corporation like Tesla with a public balance sheet, industry executives have said that it is virtually impossible for the company to move on without paying the amount due.

Barclays auto analysts Brian Johnson and Steven Hempel said that the decline in the number of physical stores could negatively impact the brand of Tesla, which has been viewed as the Apple of the auto industry.

“Much of the bull narrative has rested on Tesla being the next Apple, selling high-volume EVs at premium price point and at high gross margins, in part aided by a unique branded retail presence — a narrative we see as undermined by the recent price cuts and closing of most of the stores,” he said.

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