Tesla Motors Inc (TSLA) Drops After Morgan Stanley Comments

tesla motorsFor the five days ending Tuesday, Nov. 18, Tesla Motors Inc (NASDAQ:TSLA) rose 2.64 percent, beating the market. For that time period, NASDAQ rose only 0.90 percent, and the Dow only 0.41 percent.

However, on Wednesday morning, TSLA gave back all of the gains of the previous five days, and more.

Morgan Stanley Sharply Lowers Predictions

As of 1:00 p.m. on Wednesday, Nov. 19, Tesla had dropped 3.62 percent for the day. This was the market’s reaction to remarks made by an influential Morgan Stanley analyst, who cut his estimate for next year’s production of the Model X, Tesla’s not-yet-released new SUV.

The analyst said he now expects Tesla will produce only 5,000 Model X vehicles, down from the 15,000 he had been predicting before. He believes this will result in earnings that will be only half of what he had previously predicted.

Are the Model X Doors the Problem?

Morgan Stanley contends that the Model X’s dramatic falcon-wing doors, which open upwards, will be difficult to produce because their double hinges have not been used in that kind of door before. The analyst suggested that Tesla might ditch the doors and use a different design. Elon Musk, Tesla’s CEO, took to Twitter to shoot down that idea. “Rumors about canceling Falcon wing doors are false,” he tweeted. “At Tesla, the production car will always be better than the show car.”

Morgan Stanley Still Bullish on TSLA

Despite the Morgan Stanley analyst’s comments and the market’s reaction, it’s important to note that the analyst is still bullish on TSLA, still has an “overweight” recommendation on the stock, and still maintains a price target of $320 per share. He even said to “look for any hiccups/delays as an opportunity to increase exposure to what we believe is the most important manufacturer in global autos.”

Should Tesla Worry about Ford?

On Monday, the CEO of Ford (NYSE: F) told Yahoo Finance that Ford wants to make “electrified” cars that “the masses” can afford.

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