Tesla shares slid 4.2 per cent on Monday to $246.23, trimming their year-to-date gains to 15.2 per cent, after Goldman analyst David Tamberrino downgraded the company to “sell” from “neutral” and lowered the price target to $185 from $190. Following Mr Tamberrino’s cut, Tesla now has eight “buy” ratings, nine “hold” ratings and seven “sell” ratings, according to Bloomberg data.
Despite the company’s claims that the mass market, electric-powered Model 3 remains on track, Mr Tamberrino cited concerns about the launch “as some suppliers have expressed concern around final designs not being locked down”. Tesla has previously been hamstrung by production constraints and was delayed by two years in launching its falcon-winged Model X vehicle.
Moreover, he cited concerns about the acquisition of SolarCity that was completed in November, saying it “increased the risk profile of Tesla amid a business model transition” at SolarCity “and provides limited synergies”.
Finally, during the company’s earnings call last week, Mr Musk indicated that Tesla could look for a cash infusion as it readies for the planned launch of the Model 3 in what is being viewed as a make-or-break year for the carmaker as it also ramps up the massive battery plant dubbed the “gigafactory” and works to integrate SolarCity.
“We forecast a significant increase in near-term capex levels required to bring both the Fremont, California factory and Tesla’s gigafactory to scale,” Mr Tamberrino said, adding that he anticipated another equity raise would be needed before the fourth quarter.
Elsewhere, the stock market’s recent charge higher wobbled early on Monday morning ahead of President Donald Trump’s address to Congress on Tuesday night, but later recovered, with the Dow Jones Industrial Average closing at a record high for the 12th consecutive session. The S&P 500 also inched up to a record high.
The Dow added 0.1 per cent to 20,837.4. The S&P 500 also rose by 0.1 per cent to 2,369.7, while the Nasdaq Composite gained 0.3 per cent to 5,861.9.
“Flows to risk assets are still positive and indices are making new highs, but it feels like momentum is waning,” said Robert Cusack, portfolio manager at WhaleRock Point Partners. “Clearly, President Trump marks a fiscal policy sea change, but how long will it take to see real effects?”
The Russell 2000 index, composed of companies with a small market capitalisation, rose 1 per cent to 1,407.9, with Gogo Inc, a provider of in-flight internet services for aircraft, one of the leading performers, rising 15 per cent to $10.49.
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