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Why Tesla Shares Could Drop 70%

Mark Meadows

Analysts at Bank of America are not buying into the Tesla Motors Inc (NASDAQ: TSLA) hype. In fact, analyst John Lovallo just cut his price target for the electric car manufacturer to $65, from $70 previously. That’s not a misprint – Lovallo expects the stock to plummet more than 70 percent.

Shares of Tesla closed Monday at $207.34; shares are down 6.7 percent in 2015.

Lovallo said that both the company’s management and Tesla bulls argue that the company is constrained only by capacity and supply – issues that will be resolved. However, the analyst argued that the real issue for Tesla is much more critical: no demand. In fact, Lovallo even accused Tesla of “pulling back on production” in order to “create the appearance of rising demand.”

In Tesla’s Q4 earnings report, the company missed earnings expectations and also failed to deliver 1,400 cars in 2014.

Tesla was mostly unchanged in Tuesday's premarket after falling more than 4.5 percent on Monday.

Latest Ratings for TSLA

Feb 2015

JP Morgan

Downgrades

Neutral

Underweight

Feb 2015

Barclays

Maintains

Equal-weight

Feb 2015

Deutsche Bank

Maintains

Buy

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

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