U.S. Markets closed

Tesla shares set to fall for a seventh straight day as more analysts warn of trouble

Thomas Franck
  • The latest downward revision came from Loup Ventures co-founder Gene Munster, who wrote that Tesla will likely fall short of delivery expectations this year.
  • Munster lowered his 2019 delivery estimates by about 10% to 310,000 vehicles versus guidance in a range between 360,000 and 400,000.
  • Morgan Stanley analyst and longtime Tesla bull Adam Jonas cast doubts on Tesla and recent speculation that the company would be bought.
  • The stock was set to add to a 17% decline since May 14, a $6.88 billion drop in the company's market value.

Tesla was set for its seventh straight day of losses ahead of the opening bell Thursday after more Wall Street analysts joined the growing list of brokerages concerned with the company's financial health.

The latest downward revision came from Loup Ventures co-founder Gene Munster, who wrote that Tesla will likely fall short of delivery expectations this year as the trade dispute between the U.S. and China worsens. Munster lowered his 2019 delivery estimates by about 10% to 310,000 vehicles versus guidance in a range between 360,000 and 400,000.

"First, we are now factoring in that Tesla deliveries will be impacted by tariffs entering China," Munster wrote. "Second, non-tariff factors that will impact China demand include Chinese consumers boycotting Tesla and Chinese officials adding complexity to the delivery process."


Munster added that his estimate cut included a reduction in expected China deliveries to 40,000 vehicles from 70,000 vehicles. The new number implies that China would account for 13% of deliveries in 2019 versus a prior forecast of 25%.

The stock fell about 4% in premarket trading, set to add to a 17% decline since May 14, a $6.88 billion drop in the company's market value about equivalent to the size of Macy's or TripAdvisor. The share price had declined by more than 50% from its 52-week high by Wednesday's close.

'A distressed credit and restructuring story'

But Munster wasn't alone in his more sober outlook. In a private call with Morgan Stanley clients on Wednesday, analyst and longtime Tesla bull Adam Jonas cast doubts on Tesla and recent speculation that the company would be bailed out by a larger tech company.

"Tesla is not really seen as a growth story," Jonas said on the call, which CNBC heard in a recording. Today, "It seems like a distressed credit and restructuring story."

Jonas went on to say that neither Amazon nor Apple — rumored to once have made a bid for the Palo Alto carmaker — would want to acquire the company.

Those big tech giants "may not want to exposure themselves to the unlimited liability of being involved in owning a business where occasionally a car catches on fire, takes down a building, or accidentally kills a pedestrian or passenger," Jonas said. "The roads are very dangerous. There's a lot of stored energy in a vehicle. And the regulatory environment [around autonomous cars] has not had time to cure yet."

The sharp drop in the company's equity value began last week after an e-mail surfaced in which CEO Elon Musk directed employees to cut spending and promised to personally review expenses.

— CNBC's Lora Kolodny contributed to this report.




More From CNBC