It seems the Wall Street has lost some of the affection it had for the youngest publicly traded US automaker, electric car builder Tesla Motors, hit with the third downgrade in just a month.
UBS was the latest and third investment bank to rekindle some of the faith it initially put in the prospects of Tesla Motors, downgrading the electric carmaker’s stock – UBS analyst Colin Langan cut his rating to “sell” from “neutral”, adding he envisioned a disappointing outcome for the firm’s auto and home batter deliveries. Naturally, the stock itself took an immediate dive after the announcement, as Tesla’s shares slid as much as 5 percent in early trading. Tesla initiated a side business in May when it launched Tesla Energy, selling batteries for use at home and offices – estimating it had received orders valued at more than $800 million within just five days. “However, this pace is misleading as customers did not put down deposits, so these are just solicitations of interest,” commented Langan. He added today’s share price for Tesla factors in sales of at least 1.5 million autos within a decade and total utilization of Tesla Energy’s capacity, which are both unlikely scenarios.
He pointed out for his comments to a UBS analysis that showed Tesla’s plan to achieve 5 gigawatt of storage capacity by 2020 could be above what the market would need by that time. On Monday, before the downgrade, Tesla’s stock achieved the best valuation so far this year, at $286.65. But this month alone Deutsche Bank also downgraded Tesla to “hold” from “buy”, while Pacific Crest lowered its rating from “overweight” to “sector weight,” each citing their own separate reasons for the move.