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1 Analyst Thinks Tesla Stock Will Fall 28%

Daniel Sparks, The Motley Fool

The debate about demand for Tesla's (NASDAQ: TSLA) vehicles took another interesting turn this week as Goldman Sachs analyst David Tamberrino slashed his price target for the electric-car company's stock, citing concerns about Tesla's ability to meet delivery estimates in the second half of 2019. This news comes not long after Tesla CEO Elon Musk reassured investors that the company does not face a demand problem.

The back-and-forth between Tesla and analysts about the demand for the company's vehicles highlights the uncertainty surrounding the automaker's ability to keep growing sales.

Tesla's Model S, 3, X, and Y

Tesla stock: headed to $158?

"We believe a downward path for shares will resume as it becomes more clear that sustainable demand for the company's current products are below expectations," said Tamberrino in a note to investors on Thursday morning. The analyst also cut his 12-month price target for the stock, lowering it from $200 to $158.

In the near term, however, Tamberrino believes Tesla's second-quarter deliveries will be "fine." Indeed, the analyst projects Tesla will exceed the low end of its guidance range for second-quarter deliveries of between 90,000 to 100,000 units. It's the second half of the year that has the analyst betting the company may not live up to estimates. Worse-than-expected demand beyond Q2, Tamberrino argues, will lead to "a downward path for shares."

Following this report on Thursday, Tesla shares fell about 3%. But even after this decline, Tamberrino's $158 price target represents about 28% further downside for the stock.

What should investors believe?

As Tamberrino doubles down on his bearish outlook for Tesla stock, Musk has been as adamant as ever about the company's optimistic demand story.

"I want to be clear: There is not a demand problem," Musk told investors during Tesla's annual shareholder meeting earlier this week. The CEO even backed up this statement with some hard data, noting that second-quarter sales "have far exceeded production." In addition, a slide during the presentation declared that quarter-to-date "orders for Model S, X, and 3 are outpacing production."

While Musk's reassurance is comforting, it's understandable why some concerns about demand for the company's vehicle remain. In order for Tesla to hit the low end of its full-year guidance for 360,000 to 400,000 deliveries in 2019, the automaker will likely need to deliver more than 200,000 vehicles in the second half of the year. Though current order trends and the fact that the Model 3's international expansion has only recently ramped up do suggest this is possible, forecasting such significant growth does involve some speculation.

Investors will hopefully get more insight into Tesla's demand trends when the company reports its second-quarter deliveries sometime during the first few days of July. In its updates, Tesla sometimes provides helpful commentary on demand for its vehicles.


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Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.