Tesla stock (TSLA) fell Tuesday as some analysts scaled back their outlooks for the electric auto maker, while CEO Elon Musk defended his right to free speech.
The stock, down roughly 15% in 2019, was recently off 2.6% to $283.21. Late Monday, Musk responded to the Securities and Exchange Commission’s suggestion that some of his recent tweets about production levels amounted to contempt for a settlement he signed with the government last year. Musk’s lawyers said it was an attempt to “trample on Musk’s First Amendment rights.”
The stock’s decline on Tuesday, however, may have had more to do with a few analysts’ reaction to the recent run of Tesla news, including the company’s unexpected partial reversal of previously announced price cuts and store closures.
At Morgan Stanley , Adam Jonas cut his price target for the stock by $20 to $260, far below FactSet’s average near $337, while also lowering his estimates for sales volumes, average selling prices, and margins. (Musk said Feb. 28 that Tesla was unlikely to post a first-quarter profit.)
“We expect the share price to remain in a volatile range with modest downside to our assessment of fair value,” wrote Jonas, who has an Equal Weight rating on the shares.
Macquarie Research cut its price target for Tesla stock by $30 to $400, but reiterated its Outperform rating on Tuesday. The firm cited scaled-back earnings estimates driven mainly by lower prices. Analyst Maynard Um’s new 2019 and 2020 earnings estimates of $2.81 and $7.06 a share, respectively, are below the Street’s current consensus of $5.40 and $9.94.
Tesla has “a path to continued demand through various new geographic releases, refreshes, and new introductions,” Um wrote.
Amid everything else that is going on, Musk is expected to unveil a new model the Model Y mini-SUV at an event Thursday night. While future company developments could provide some trading opportunities, for now, Morgan Stanley’s Jonas thinks the stock might not be worth the trouble.
“We are not inclined to buy now as we don’t believe we’d be compensated for the amount of risk we’re taking,” Jonas wrote.