Goldman Sachs lowers its Tesla price target for the 4th time this year and warns the second half of 2019 could get even worse

  • David Tamberrino, an analyst at Goldman Sachs, cut his price target for Tesla to $US158 on Thursday – 29% below the stock’s current price.
  • It’s the fourth time this year that the bank has cut its price target for the stock, amid worries about continued demand for the company’s electric cars.
  • Shares of Tesla fell about 1.4% in early trading following the brutal note. Follow the stock in real-time here.
  • Visit Business Insider’s homepage for more stories.

Tesla shares have fallen more than 32% since the beginning of the year, and Goldman Sachs is warning things could get even worse.

In a note to clients Thursday, analyst David Tamberrino lowered his price target to $US158 from $US200, his fourth downward revision this year, warning that his many of his peers on Wall Street are “too optimistic” in how they model the company’s delivery volumes.

“While we believe 2Q19 should be fine,” he said. “We do believe 2H19 (and beyond) volume estimates look high considering there are fewer levers to pull to stoke demand going forward (i.e., company released lower priced variants of the Model 3, a leasing option was introduced, and right-hand drive orders have begun).”

His concerns get even worse from there. A federal tax credit available to Tesla customers will be once-again cut be cut half on July 1, from $US3,750 currently to $US1,875. Other than new financing options, he says, there are no clear “new demand pockets” for the company to open.

“We believe that is the largest question for investors to underwrite at this point – what are sustainable demand levels for the Model S, Model X, and Model 3 – and how does that change with the introduction of Model Y production,” Tamberrino said.

To be sure, there are some potential catalysts, Goldman Sachs says. Namely, a “powertrain and battery technology investor day” in the third quarter and the opening of Tesla’s second Gigafactory in Shanghai, which the company says should happen this year.

“We believe the potential pull-forward of the Model Y production launch would carry the most impact given the potential size of the market and margin profile for the vehicle,” Tamberrino said. “We continue to believe that the Model Y TAM is approx. 1.7x the size of the Model 3 TAM, but there could be further upside potential to the addressable market should the company graduate demand from lower priced buyers.”

Goldman Sachs’ new price target of $US158 is roughly 40% lower than Wall Street’s average of $US269, according to a Bloomberg poll. Twelve analysts rate the stock as buy, with eight recommending hold, and 16 advising clients to sell.

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