Morgan Stanley slashes its Tesla target for the 3rd time this year (TSLA)


elon musk

  • Tesla’s price target got cut at Morgan Stanley for the third time this year.
  • Investor concerns over Tesla’s financial strength could hit employee morale and customers’ perception of the brand, the firm’s analysts said in a report.
  • Morgan Stanley’s note comes days after Tesla’s first-quarter delivery results fell below analysts’ expectations and slammed the electric car-maker’s stock.
  • Watch Tesla trade live.

Tesla investors’ negative sentiment could bleed into the electric car-maker’s business itself, Morgan Stanley said in a report out Monday, prompting the firm to cut its price target on Tesla shares for the third time in as many months.

“We are increasingly concerned about the impact that investor concerns over Tesla’s financial strength and forward looking liquidity position could potentially have on employee morale, customer perceptions and standing with key stakeholders and suppliers,” analysts led by Adam Jonas wrote in a report.

Morgan Stanley lowered its price target from $260 to $240 a share, implying a 13% drop from Friday’s closing price.

Its price cuts on the stock have come swiftly. Last month, Jonas and his team lowered their price target from $283 to $260, and the month before that they dropped it from $291 to $283. 

“If and how Tesla may have access to capital is a top theme in discussions with investors,” the team said, adding that they still think the carmaker will have to raise $2.5 billion of equity in the third quarter. “Even bulls we speak with are in support of the company raising equity capital sufficient in amount to quell questions about its potential financing needs.”

The report comes after Tesla on Wednesday released first-quarter delivery figures that fell short of Wall Street estimates, sending the stock plunging and underscoring what analysts see as wilting demand.

Read more: Tesla analysts are piling on after disappointing delivery numbers sent the stock plunging

That wasn’t all Tesla shareholders grappled with last week.

On Thursday, CEO Elon Musk appeared before a federal judge in Manhattan after the Securities and Exchange Commission asked the court to hold Musk in contempt over a tweet about vehicle production. Musk and the SEC were ordered to meet for at least one hour within the two weeks to iron out their differences. 

In its Monday report, Morgan Stanley’s analysts sounded distressed over various fundamental issues hanging over Tesla.

“The fundamental narrative around Tesla appears more clouded than we have seen in several years,” the analysts wrote. “Signs of weakening demand have raised long-standing questions about the company’s ability to fund itself as an independent company.”

Tesla was down 17% this year through Friday, trading at $274.96 a share.

Now read more Tesla coverage from Markets Insider and Business Insider:

  • Tesla is facing an ‘air pocket’ in demand earlier than expected, Morgan Stanley says
  • Tesla and Trump both thrive on chaos — but Elon Musk’s car company needs to chill out if it’s going to succeed
  • Despite a bad quarter, Tesla is single-handedly growing the sluggish electric-car market

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