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TSLA: Wall Street goes after Tesla at a critical time

Several Wall Street analysts are issuing negative notes on Tesla (TSLA) this week as the share price plummeted over the past few days since Tesla announced layoffs.

On top of it, the TSLA share price is coming more into focus as a large convertible note is due by the end of the quarter.

Tesla has a $920 million convertible bond due in just over a month.

The price set to convert the note in stock was $359.88 per share, but TSLA is now trading below $300.

According to a notification sent to bondholders, Tesla intends to pay the note both in cash and stock, but the lower the share price, the more Tesla is going to have to pay in cash or the higher the dilution, which is also going to affect the share price.

Now, Wall Street isn’t letting that price go up as analysts are pilling up on Tesla this week.

Goldman Sachs’ David Tamberrino released a new note yesterday

“We believe that 2019 is shaping up to be another choppy year for Tesla and its shares as it navigates the US Federal Tax Credit phase-out and mix-down of its Model 3 program,”

He added:

“Ultimately we continue to see downside to consensus expectations over the coming years and expect the company’s shares to follow,”

David Tamberrino is ranked #4,365 out of 5,129 Analysts on TipRanks with a success rate of 57% and an average return of -6.8%. He has been maintaining a sell rating on Tesla’s stock over the last year:

Today, it’s RBC Capital’s turn to weigh in and they are also seeing a lot of downsides.

Analyst Joseph Spak sees Tesla becoming more “realistic” about their near-term future:

“Whether its cutting the price of their lineup by $2k/unit, admission the federal tax credit expiring will hurt, acknowledgment that Tesla can’t sell at $35k Model 3 profitably and costs need to come down, or language around full-self driving – we’d classify recent commentary and actions by the company as more realistic,”

But he doesn’t think that it is being considered in the current valuation:

“The current valuation already considers overly lofty expectations. For instance, let’s assume 1mm [Model 3] units @$55k ASP, 12 percent EBIT margins, no interest/equity raise all by 2025. This is undoubtedly solid earnings, but at a more ‘mature’ 15x P/E, the discounted back value is ~$195, meaning even in an optimistic case at least 1/3rd of today’s price is an Elon premium,”

Therefore, he reduced the firm’s price target on TSLA from $290 to $245 per share. Tesla’s stock fell 3% today at $289 per share.

Joseph Spak is ranked #541 out of 5,122 Analysts on TipRanks with a success rate of 55% and an average return of +7.3%. He has been maintaining a hold rating on Tesla’s stock over the last year until now:

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