Analysts at two important financial institutions have recently decided to downgrade the youngest publicly traded US automaker, Tesla Motors, signaling a share retreat from $280 last Friday to $258 on Tuesday.
Brad Erickson, Pacific Crest’s Tesla analyst, decided to lower the company’s rating from Overweight to Sector Weight with a fair value of $293 for the shares a day after Rod Lache from Deutsche Bank also downgraded the company from Buy to Hold, even though their target price for the shares was lifted from $245 to $280. There have been various headwinds this year for the green all-electric auto manufacturer, such as Chinas woes and concern about the cheap oil prices, but the situation has been leveled lately by Model X launch optimism and the recent second quarter sales tally that exceeded analyst and internal predictions.
Meanwhile, the industry observers also have some positive predictions for the company for the half decade up to 2020: Erickson believes the revenue will jump more than 50 percent in 2019 and 2020 from $19.8 billion to $31.2 billion. That would be thanks to the introduction of the Model 3, surging in sales from just below 36,000 vehicles in 2018 to 113,000 in 2019 and 332,000 in 2020. There are still numerous woes for Tesla to overcome in the years to come, as the Model 3 would have to be a top selling vehicle in the regions it becomes available and there are also numerous production challenges and profit margin issues.