Tesla (TSLA) Stock Pummeled on Goldman Downgrade

Shares of Tesla Motors Inc. (TSLA) closed down -18.21 or -16.28 percent to $109.05 on Tuesday after a Goldman Sachs analyst set a price target of $84 per share for the company's stock. The amount was 34 percent below Tuesday's opening price of $126.32. Tesla stock has been on a tear recently, reaching an all-time high of $133.26 per share on July 12th. After Tuesday's close, Tesla stock is still up +226.99 percent since July 17th, 2012 and was added to the Nasdaq 100 on Monday.

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Palo Alto, California based Tesla Motors Inc. has been in business for ten years and produces two fully electric powered automobiles, the Tesla Roadster and the Tesla Model S. Both the Roadster and the Model S are the first fully electric sports car and luxury sedan ever produced. In addition to producing the two automobiles, the company also markets electrical components to other automakers such as Daimler and Toyota (TM). These include electric powertrain components and lithium-ion battery packs used in electric and hybrid models. In a report on the auto industry, Goldman Sachs analyst Patrick Archambault gave a three case scenario on Tesla stock. The first one, a worst case scenario would have Tesla stock at $58 per share after sales of 105,000 units with an operating margin of 14.6 percent. The second scenario would have Tesla selling 150,000 units with an operating margin of 14.8 percent which would have the stock at a price target of $83 per share. In Archambault's best case scenario, Tesla would secure a 3.5 percent share of the global luxury car market by selling 200,000 units at a 15.2 percent operating margin, which would make the target price for Tesla stock $113 per share. Averaging the three scenarios would give a six month average for Tesla shares of $84 per share. In an interview on July 10th at the Tesla factory in Palo Alto, CEO Elon Musk stated that the he is "very confident" that current production of 400 units per week would reach 800 per week by 2014. "At this point, making 400 cars a week actually feels like a walk in the park, whereas it was a nightmare in Q4," he said. Tesla's California factory now has 3,000 employees including 2,000 assembly workers working two full shifts. According to Musk, the plant has capacity to produce as many as 500,000 automobiles a year, which gives ample room for the company to grow further. With production of the new Model S in full gear and with a minivan planned for next year, Tesla seems well on its way to becoming a top contender in the electric car manufacturing business. Musk's goal nonetheless, is to produce a lower priced model, "I don't spend my time pontificating about high-concept things; I spend my time solving engineering and manufacturing problems," Musk plans on producing an electric car in the $30,000 price range. With earnings out on July 25th, Tesla stock may see action on both sides of the market. While Tesla stock has appreciated considerably, the stock still has an enormous short position. After being in business for 10 years, the company finally turned a profit in the first quarter of 2013. All eyes will be on the company's second quarter earnings, which according to some analysts could trigger another short squeeze in the stock. Other News About TSLA Elon Musk to Publish 'Hyperloop' Design Without Patents, Under Open Source License Tesla CEO to put Hyperloop commuter train design on the web. (TSLA) Seeking Alpha analyst sees possibility of another squeeze after earnings. Other Stocks in the News Wednesday's Movers: Yahoo Rallies on Earnings Yahoo up on better than expected earnings. Here Comes Google TV But TV Industry Not Going Away Anytime Soon: Blodget Google looking to license content to media outlets. Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on Jul 17, 2013
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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