TSLA Stock Fell 2.38% Yesterday, Up 3.19% in Pre-market, Analysts Cut Forecasts for Tesla

UTC by Bhushan Akolkar · 3 min read
TSLA Stock Fell 2.38% Yesterday, Up 3.19% in Pre-market, Analysts Cut Forecasts for Tesla
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Tesla’s production line has been severely impacted by the rising COVID-19 cases in the U.S. and across the globe. Analysts are weighing different possibilities for its first-quarter deliveries. TSLA stock is unstable.

In the first 40 days of 2020, Tesla Inc (NASDAQ: TSLA) stock took Wall Street with surprise with an unprecedented rally to above $900 levels. By mid-February 2020, the Tesla (TSLA) stock gave over 100% returns to its investors. Besides, the stock rally came amidst the strong Q4 2019 numbers with Tesla ramping up its production.

But the coronavirus outbreak in China spoiled the show for the electric-car-maker and the global markets. Since the COVID-19 outbreak, the Tesla stock has corrected 50% from its peak. On Monday, while the stock market was showing good recovery, the Tesla stock was down 2.38% just holding above $500 levels.

At Monday closing, Tesla (TSLA) was trading at a price of $502 with a market cap of $92 billion. Today in the pre-market, TSLA is rising by 3.19%. It is trading at $518,15.

Earlier this year, after the Q4 2019 results, Tesla CEO Elon Musk promised that they would be delivering 500,000 Tesla models this year. However, the global economic meltdown and supply chain disruption, things don’t appear gloomy.

Amid the coronavirus outbreak, first in China and then across the globe, Tesla’s production output looks disrupted. Tesla already started its production at its Shanghai gigafactory in January this year. However, it had to shut down its factory owing to the widespread COVID-19 cases but then decided to resume the operations.

Besides, Tesla has also suspended its production at its Fremont and New York factories owing to the rapidly rising cases in the U.S. In a press release last week, Tesla wrote:

“Despite taking all known health precautions, continued operations in certain locations has caused challenges for our employees, their families and our suppliers. As such, we have decided to temporarily suspend production at our factory in Fremont, from end of day March 23, which will allow an orderly shutdown.”

However, Tesla is continuing its basic operations like vehicle support and energy service operations for charging infrastructure.

Analysts Cut Down their Estimates for Tesla

In the wake of the recent situation, market analysts are reevaluating Tesla’s condition. Morgan Stanley analyst Adam Jonas said that the slowdown caused by COVID-19 can impact Tesla’s deliveries. Jonas has cut down Tesla’s delivery estimate by 10% of its earlier planned 97,000 deliveries.

As per Jonas’ forecast, Tesla will likely deliver 88,000 vehicles in the first quarter. Jonas has put a price target of $440 for the Tesla stock. Similarly, Citigroup analyst Itay Michaeli has lowered his Tesla price target to $246 from $312. He wrote:

“While Tesla’s balance sheet should be able to withstand a highly disruptive second quarter, the risk of an extended shutdown at Fremont, Calif., could put significant pressure on the balance sheet”.

However, there are a few analysts who continue to remain bullish on Tesla. New Street Research analyst Pierre Ferragu has upgraded Tesla’s rating from hold to buy. Piper Sandler analyst Alexander Potter also holds similar views. Both these analysts have given a price target of $800 for the TSLA stock.

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