Tesla could crash to $10 in 'worst-case scenario'


A week later, Tesla raised more than US$2.3 billion through offering common stock and convertible bonds in a move that analysts described as "net positive" and probably long overdue. In particular, Morgan Stanley analysts said the reduction was driven by concerns around Chinese demand for Tesla products.

Tesla's (NASDAQ: TSLA) shares were down more than 2 percent in pre-market trade on Tuesday, after they hit on Monday the lowest since December 2016 at US$205, after Wedbush Securities cut their share price target to US$230 from US$275.

The company is facing signs of dragging demand as rivals step up electric efforts, as well as issues related to cash flow and manufacturing, its outlook in China and its eccentric, charismatic Chief Executive Officer, Elon Musk.

The Model S sedan was reduced by $3,000, while the Model X SUV received a $2,000 cut. The electric auto maker reported in April that it delivered 63,000 vehicles in the first quarter, far below expectations of 76,000 deliveries. Baird analysts slashed its target from Dollars 400 per share to USD 340 per share. All of this came after Tesla had difficulties producing the Model 3.

Prior to this, in November 2018, Musk had hinted that his company has plans to establish a "partial presence" in India, Africa, and South America by the end of next year with an aim to expand further in 2020.

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Wall Street seems to be piling onto the struggling stock.

"The business fundamentals of Tesla always have been shaky, but the stock price has been buoyed by the story that this is a company that was going to do huge things", said Navigant Research analyst Sam Abuelsamid.

The new worst case price would be a 95pc drop for Tesla's shares, which are now trading at around $205, although the bank maintained its main price target at around $230 and its best case scenario at $391. It does, however, show increasing concerns among investors.

While 10 Wall Street analysts who cover the stock now recommend buying the electric carmaker's shares, nine are neutral and 12 recommend selling, according to Refinitiv Eikon data. "T. Rowe Price Associates Inc. -for years one of Tesla's biggest investors-sold roughly 81% of its holdings over the first three months of 2019, leaving the firm owning the smallest amount of Tesla stock since 2013". The median price target is $250.19, a fifth above the current market.