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Banking giant warns Tesla stock to crash another 30%

Banking giant warns Tesla stock to crash another 30%

The electric vehicle (EV) industry has been having a few bad quarters with none so prominent and few as hard-hit as Elon Musk’s Tesla (NASDAQ: TSLA).

Indeed, Tesla has apparently been suffering setback after setback since the start of 2024 as its stock became the worst performer within the S&P 500 benchmark index, the company sold only one car in South Korea in January, and, finally, reported that the first quarter (Q1) of the year was its worst in terms of deliveries since Q3 2022.

The sluggish business has made investor and analyst sentiment turn decidedly more bearish – though the consensus remains overall neutral – and there have been multiple downgrades for the company in recent weeks – even among noted bulls.

JPMorgan downgrades Tesla, foresees additional 30% drop

The latest in the string of downgrades for Tesla came as recently as April 3 – shortly after the delivery report was published – from the banking giant JPMorgan (NYSE: JPM).

According to analysts, the asking price for TSLA shares remains too dear even after falling approximately 60% from its all-time high above $400 reached in 2021.

Indeed, the bank reiterated its “underweight” – “sell” – rating for Tesla stock but further slashed the 12-month price target from $130 to $115 – a 31% drop from the 32% decline already recorded year-to-date (YTD).

A crucial reason for the downgrade has been the disappointing delivery report which – at about 380,000 vehicles shipped – fell short of Q4 2023 – 484,000 – analyst expectation recorded last summer – 626,000 – 2024 analysts forecasts – 457,000 – and was weaker than any since Q3 2022.

Tesla faced with deluge of downgrades

While JPMorgan’s downgrade is significant, it is far from the biggest or most dramatic forecast change of 2023. In mid-March, Wells Fargo (NYSE: WFC) offered its own adjustment where it set the new target – accompanied by an “underweight” rating – in which it lowered the target from $200 to $125.

The bank went even further at the time as it, while refraining from setting it as the official forecast, opined that a drop to $44 per share is entirely within the realm of possible for Tesla. 

Still, the lowest price target was TSLA was already assigned in January when Gordon Johnson, the Founder and CEO of GJL Research, estimated the EV maker’s fair value at $23.53 per share.

Finally, even Tesla bulls have been downscaling their predictions with the current highest target price of $320 – assigned by Morgan Stanley (NYSE: MS) representing a downgrade from the previous $345.

Tesla stock price chart

While it remains unclear whether Tesla will indeed collapse to $115, $44, or even $23.52 before recovering, it is evident that Elon Musk’s EV maker has been struggling in the stock market for multiple months.

The last 52 weeks saw TSLA stock drop 12.57% while, YTD, it is 31.75% in the red.

TSLA stock YTD price chart. Source: Finbold

The effects of the delivery report are particularly visible on the weekly chart as TSLA shares declined 7.27% in the time frame. The latest full trading day, however, saw them close 1.05% in the green at $169.54. Tesla stock price today, in the premarket, stands at $169.56 after a 0.70% rise.

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