Wall Street's biggest Tesla bear says shares are going to crater 80% to $54 (TSLA)



  • Wall Street’s biggest Tesla bear, Vertical Research’s Gordon Johnson, reiterated his “sell” rating and lowered his price target to $54 — 80% below shares were trading Friday.
  • He says Tesla is “running out of people who want to buy its cars.”
  • Johnson is also worried about heavy competition coming from the likes of Jaguar, Porsche, and Mercedes.
  • Watch Tesla trade live.

Tesla is set to plunge 80% to $54 a share, a level last seen in May 2013, according to the biggest Tesla bear on Wall Street.

“Tesla is running out of people who want to buy its cars,” the Vertical Research analyst Gordon Johnson said. He cited the electric-car maker’s weak first-quarter delivery, which showed deliveries were down more than 30% quarter-over-quarter, as being particularly ominous given the exhaustion of European demand, the opening of China to the Model 3, and the recent price cuts in the US.

In light of this, Johnson strongly doubts Tesla will be able to meet its 2019 delivery guidance of 370,000 to 400,000 vehicles, which it reiterated alongside its first-quarter announcement. Deliveries would have to pick up 57% from the first quarter to meet the low-end of the guidance and almost 80% to reach the high-end.

Such a pick-up would come in the face of several headwinds for the electric vehicle manufacturer, according to Johnson, including the continued roll-off of the US federal tax credit and the roll-out of fully electric vehicles from a bevy of competitors including Jaguar, Porsche, and Mercedes (all of which will benefit from the full $7,500 tax credit). In addition, signs of an economic slowdown in the US point to auto sales weakening overall.

Read more: Tesla is in ‘demand hell’ ahead of its Model Y unveiling, Wall Street’s biggest bear says 

And while Johnson is definitely the most bearish Tesla analyst on Wall Street, with a price target almost $260 below the consensus, he’s not the only one who was worried about the automaker’s first-quarter deliveries. 

“Tesla’s 1Q19 vehicle production & deliveries report was substantially worse than expected,” JPMorgan analyst Ryan Brinkman, who lowered his price target to $200 after Wednesday’s report, told clients in a note out the following day.

In addition to this “demand hell,” as Johnson refers to it, Tesla CEO Elon Musk continues to battle the Securities and Exchange Commission. On Friday, Musk was ordered by a federal judge to seek a settlement with the agency within the next two weeks. The SEC has accused Musk of violating a previous settlement with the agency over tweeting misleading disclosure statements.

Tesla shares were down more than 17% this year, trading near $275.

Join the conversation about this story »

NOW WATCH: The founder and CIO of $12 billion Ariel Investments breaks down how his top-ranked flagship fund has crushed its peers over the past 10 years