(Reuters) – Goldman Sachs on Thursday cut its price target on Tesla, Inc. is 21%, the third lowest on the Street, raising concerns about the sustainability of demand for the electric car manufacturer’s models.
FILE PHOTO: Tesla’s Superchargers are presented in Mojave, California, USA, on March 11, 2019. REUTERS/Mike Blake
Earlier this month, the Chief Executive Officer Elon Musk told shareholders that Tesla was on track to get rid of the volume of the production target for the year, and it was a good opportunity to record data on each level.
Goldman Sachs analyst David Tamberrino believes in, even though the second quarter has been witness to a better environment, the demand for Tesla’s cars, he doesn’t think it is sustainable.
“Even though there is a potential benefit of the discovery of a faster ramp, or in advance from the Model of Y in the diagram, there is likely to be cannibalization of the current Model X and Model 3, the demand for its products, with a new crossover variant of,” Tamberrino, wrote in a note.
Analysts doubt, however, whether there is a global demand for the hundreds of thousands of Model 3 sedans, and other vehicles, Tesla aims to produce, after the supplies declined to 31 percent in the first quarter of the year.
“We believe that the greatest demand is for investors to subscribe to at this point — what would be a sustainable demand for the Model S, Model X and Model 3, as well as how to change that with the introduction of the Model Y in production,” Tamberrino said.
The broker maintained its “sell” rating on the stock, cut his target by $42 to $158, and 34% lower than the median value of the goal, saying: “the Street is still modeling the ideal of sustainable volumes for the Model”.
Tesla’s stock has more session to win in June and then losing a few for the company, which has lost 33% in value so far this year. However, led by Musk’s short-term supply in the future, shares have bounced back in recent years. June is the best month since October for Tesla’s stock.
Tamberrino is expected that the downward spiral is for the shares to continue as it is becoming more obvious that a sustainable demand for Tesla’s products are expected to be.
The company’s shares were marginally down at $226.10, in the beginning of the trade.
Twelve of the 31 estate agents covering the stock rate it “buy” or higher, and 7 are “on hold”, and 12 “resell” or less, in accordance with the IBES data, on Refinitiv.
Reporting Vibhuti Sharma in Bengaluru; Editing by Shinjini Ganguli