Despite the broader market closing at all-time highs, shares of electric car maker Tesla Motors (NASDAQ:TSLA) slipped 11 cents on Friday to close at $192.18. TSLA hit an intraday low of $190.81 following a research note from JP Morgan (NYSE:JPM) analyst Ryan Brinkman writing that after meeting with General Motors’ (NYSE:GM) CFO Chuck Stevens and test driving GM’s new Chevrolet Bolt, remains “increasingly concerned” about Elon Musk’s company being able to achieve its profit objectives.
Commenting on the new Bolt, the analyst said the electric vehicle (EV) represents “solid competition” for Tesla’s upcoming compact luxury sedan Model 3 and that GM is the first automaker to globally market a “modestly” priced battery electric vehicle with a range in excess of 238 miles. Additionally, and to illustrate the importance of Bolt, Brinkman points out that GM plans to extend its EV beyond sales to consumers and into ride-sharing apps, including of the autonomous variety.
Brinkman, who reiterates an ‘Overweight’ and ‘Underweight’ rating on GM ($37.66) and Tesla stock, respectively, also notes that Tesla will find it increasingly difficult to profitably compete in an increasingly competitive market for electric vehicles.
It should be noted that this is not the first time Brinkman has expressed skepticism about Tesla’s ability to hit its objectives. Back in May JPM’s analyst said he was doubtful of Tesla’s production plans for its upcoming Model 3 mass-market to build a total of 500,000 all-electric vehicles in 2018, two years ahead of schedule.
“We previously held some hope that, with improved execution, Tesla could prove relative skeptics such as ourselves wrong, by in fact ramping to 500,000 units by 2020. We think they stood an outside chance of doing this. But these new targets we think standstill less chance of being accomplished within the given more aggressive timeframe,” Brinkman wrote at the time in a note to investors.
Tesla Stock Action
After bottoming on February 10 ($141.05), TSLA rebounded above $265. However, after putting in a series of higher-highs at that level, which culminated with a 52-wkh of $269 and change, ticker has fallen back toward the lower end of that trading range.
Shares are now down 27.5%, probing their 9-month lows along the $190-$192 area. Ticker has broken its $200 support level extending as lows as $181.47, setting a higher low for the year.
In Friday’s session the issue bottomed intraday at $190.81 and seemed to be attempting to distance itself from this major support level as it closed the day above $192 with the 50-day MA and 200-day MA located at $191.29 and $208.70 levels, respectively. Some consolidation at current levels could set it up for a move higher towards next resistance at $193.74. If it won’t be able to, which is quite likely, next support is at $190.72. One-year chart indicates short-term trend changes from sideways at best to potentially bearish.
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Not sure how this all makes sense…meeting with GM about Bolt convinces the analyst that Tesla will have problems?? Is this perhaps because the overall cost of an EV is tied up in the battery pack and GM doesn’t have a Gigafactory nor relationship with Panasonic? Is GM busy telling him how they aren’t sure how they can make a profit without raising the price higher than the Model 3 and only building in low volume to government incentives? Not surprised the Bolt isn’t going to be the “tesla killer” that was predicted, but I am surprised this story wasn’t turned around on it’s head. This is why the Model 3 is going to be successful (!)
TSLA fan – as always you are all blind to the point. GM makes and sells millions of cars – Tesla has made thousands and yet is priced at 2/3s the price of GM. GM can always expand EV blending the cost of expansion to a already profitable line. Tesla is trading at 20 X revenue – the point is GM just has to get better. Ford, Jag, BMW have not even gotten started and now Google says they will supply them all with self driving technology – all this adds up to say – Musk asks like he has already executed and is the winner – it is not over yet and the party is about to get crowed and 30 billion is lot for a company facing all his challenges – I would not put my kids college funds in this one.
“Tesla is trading at 20 X revenue”
12B x 20 = 240B
Although Tesla does double sales yearly – it is not “quite” fortunate enough to sell stock at 20X forward earnings.