Tesla shares are likely to take a hit in the third quarter as the company's strategy of boosting sales by slashing prices loses steam, according to Wells Fargo.
TSLA YTD line Tesla Wells Fargo has an underweight investment opinion on Tesla and a price target of $120 per share, implying nearly 40% downside from Friday's close of $197.88.
has plateaued, and Tesla faces aggressive competition in China from companies such as BYD, leaving "little immediate levers to pull to increase volumes," the Wells Fargo analysts said.
The research team is also worried about the demand and profit margins for Tesla's smaller, mass-market Model 2.
"We are cautious on margins given likelihood of more price cuts & lower volumes," the Wells analysts said.
Persons:
Colin Langan, TSLA, Tesla
Organizations:
U.S . Electric, Wells
Locations:
Wells Fargo, EU, China, U.S