Shares of Tesla Inc. (NASDAQ:TSLA) plunged more than 5% in early morning trading hours Wednesday after a new report from Goldman Sachs (NYSE:GS) expressed concern over the company’s sluggish sales growth.
“We remain sell rated on shares of TSLA where we see potential for downside as the Model 3 launch curve undershoots the company's production targets and as 2H17 margins likely disappoint,” said Goldman analyst David Tamberrino in a note.
Tamberrino lowered his price target for Tesla to $180 per share from $190, which would represent a drop of nearly 50% from Monday’s close. The analyst also noted that Tesla’s second-quarter deliveries missed his estimates, and he slashed his annual growth projection to 5% through 2021—down from his previously projected 13% growth rate.
Tesla blamed its second-quarter deliveries miss on a temporary production issue with its 100 kilowatt-hour battery packs, but Tamberrino clearly thinks the problem extends further than a short-term problem. In fact, today’s note mentioned that demand for Tesla’s existing models, the Model S and Model X, was “plateauing.”
Despite some disappointing earnings and vehicle delivery results, shares of Tesla have skyrocketed nearly 70% year-to-date. Nevertheless, for those that remain cautious on the stock, the company’s actual performance has created a plethora of unanswered questions.
Excitement over the launch of the Model 3 has fueled the optimistic trading, but if the rollout doesn’t go smoothly, Tesla could be in even bigger trouble.
For now, TSLA remains a Zacks Rank #3 (Hold).
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Tesla Inc. (TSLA): Free Stock Analysis Report
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